Interest rate on public provident fund (PPF) scheme has been lowered to 7.1 per cent for the upcoming June quarter of financial year 2020-21. This is the lowest interest rate offered on the popular small savings scheme since 1977. Till the March quarter of FY20, PPF accounts used to attract 7.9 per cent interest.

Finance Ministry has slashed the interest rates on other small savings schemes too, with changes varying in the range of 0.7-14 per cent. The new interest rates will remain in effect for the first quarter of financial year 2020-21, that is from April 1, 2020 to June 30, 2020. Rates for small savings schemes are revised quarterly.

"In exercise of the powers conferred by Rule 9(1) of the Government Saving Promotion General Rules, 2018, the rates of interest on various Small Savings Schemes for the first quarter of financial year 2020-21 starting from April 1, 2020 and ending on June 30, 2020 have been revises," the Finance Ministry said in a statement on Tuesday.

This is the first revision in small savings schemes interest rates since July 2019 when they were reduced by 10 basis points. Earlier this year, Economic Survey had recommended lowering the rates offered on small savings schemes.

Interest on time deposits has been slashed by 1-1.4 per cent across tenors. Time deposits for 1-3 years will attract 5.5 per cent, instead of earlier 6.9 per cent. For 5-year time deposits, depositors will accrue 6.7 per cent from next quarter, instead of 7.7 per cent. In case of 5-year recurring deposits, interest rate has been lowered by 1.4 per cent to 5.8 per cent from 7.2 per cent.

From April 1 onwards, Senior Citizen Savings Scheme will attract 7.4 per cent interest instead of 8.6 per cent. Monthly Income Account will accrue 6.6 per cent interest, as opposed to 7.6 per cent earlier.

Interest on National Savings Certificate (NSC) will be calculated at 6.8 per cent from next quarter onwards, insteadn of 7.9 per cent. Menawhile, interest rate on Kisan Vikas Patra (KVP) has beenn lowered to 6.9 per cent from 7.6 per cent. The maturity period has also been changed to 124 months from 113 months. Sukanya Samriddhi Account Scheme will attract 7.6 per cent instead of 8.4 per cent.

This has the approval of Finance Minister, the circular said.