The Finance Ministry has withdrawn its decision to slash interest rates on small savings schemes like the Public Provident Fund (PPF) and the National Savings Certificate (NSC), terming it an ‘oversight’, on Thursday. The announcement was made by Finance Minister Nirmala Sitharaman on April 1. “Interest rates of small savings schemes of Government of India shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Union Finance Minister Nirmala Sitharaman wrote on Twitter.

This came after the Ministry of Finance had on March 31 announced a cut in small savings deposit rate from 4 per cent to 3.5 per cent for the first quarter of the financial year starting April 1, 2021. Besides this, rates of other small saving schemes were also cut. The ministry said the rate cuts “are in line with overall interest rate movement in the financial system.”

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The Finance Ministry on March 31 cut one-year time deposit rates to 4.4 per cent from 5.5 per cent, and two-year, three-year, four-year, and five-year recurring deposit rates to 5 per cent, 5.1 per cent, 5.8 per cent and 5.3 per cent, from 5.5 per cent, 5. 5 per cent, 6.7 per cent and 5.8 per cent, respectively. It had also cut interest rates of the Senior Citizen Savings Schemes to 6.5 per cent from 7.4 per cent; of the Public Provident Fund Scheme to 6.4 per cent from the earlier rate of 7.1 per cent; of the Kisan Vikas Patra scheme to 6.2 per cent from 6.9 per cent; and of the Sukanya Samriddhi Account Scheme to 6.9 per cent from 7.6 per cent.