Interest rates on various small savings schemes like Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and National Savings Certificate have been reduced by 10 basis points for the 1 July to 31 September quarter. One basis point is one-hundredth of a percentage point.
Since April 2016, interest rates of all small saving schemes have been linked to government bond yields and are now recalibrated on a quarterly basis. Over the last couple of years, interest rates of most small savings schemes has witnessed a decline of about 1 percentage point . For instance, the interest rate on Senior Citizen Savings Scheme has come down from 9.3% in FY2015-16 to 8.3% now.
Should this rate cut make you revisit your investment portfolio, especially if you invest substantially in small savings schemes?