Govt cuts public provident fund rate from 8.7% to 8.1%

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In a move that will hit the common man, the government today slashed interest rates payable on small savings including PPF and Kisan Vikas Patra (KVP) in a bid to align them closer to market rates.

In a move that will hit the common man, the government today slashed interest rates payable on small savings including the popular public provident fund (PPF) and Kisan Vikas Patra (KVP) in a bid to align them closer to market rates. As a part of its February 16 decision to revise interest rates on small savings every quarter, the interest rate on public provident fund (PPF) scheme will be cut to 8.1 percent for the period April 1 to June 30, from 8.7 percent, at present. Similarly, the interest rate on KVP will be cut to 7.8 percent from 8.7 percent, according to a Finance Ministry order. Among the other schemes, the government cut rates across savings scheme spectrum, barring post office, which was retained at 4 percent. “On the basis of the decisions of the government, interest rates for small savings schemes are to be notified on quarterly basis,” the order said announcing the rates for the first quarter of fiscal 2016-17. The government had on February 16 announced moving small saving interest rates closer to market rates.