Skip to main content

PPF, NSC RATES TO BE CUT

By
The government is set to reduce interest rates on small savings products such as public provident fund and National Savings Certificate over the next few days - a move that will impact returns on your bank fixed deposits but also pave the way for banks to pare lending rates in the coming months and reduce the EMI burden. 


The new formula will see small savings rates linked to returns on government securities of comparable maturity, with the reduction expected to be up to 50 basis points (100 basis points equal a percentage point). The finance ministry is finalizing product-specific rates and sources said the impact would be higher in case of maturity period of less than five years. There are indications that senior citizens and women will be protected with products such as the Sukanya Samriddhi Yojana spared the the axe, at least for the moment. 

The new rates are expected to be notified over the next few days with the government set to announce quarterly revision instead of an annual reset, which is the norm currently, sources said. 

Banks are expected to follow the small savings rate cut with lower fixed deposit rates, which over a period of a few months may translate into lower lending rates. In the past, lenders have been reluctant to pass on the benefit of lower rates to borrowers. 

The Reserve Bank of India and banks have been seeking a reduction in small savings rates, arguing that PPF and other products offered higher returns when compared with fixed deposits, resulting in a flight of funds to the government schemes. 

As a result, banks have been forced to maintain higher deposit rates, making it difficult for them to pass on the benefits of lower policy rates. Bankers have said higher small savings rates have meant that lending rates have been cut by a lower extent compared to RBI's policy rate reduction of 125 basis points last year. 


Although the move may trigger a fall in returns on your savings, it is seen as a reform move by the government, which recently announced a plan to end subsidies to the high-income segment. The reduction also comes at a time when the middle class has become more comfortable investing in debt and equity mutual funds, which over the past decade have emerged as an attractive savings tool. 

COURTESY: SAPOST
Labels:

Comments

Post a Comment

Popular posts from this blog

Model representation to be submitted to Head of the office for grant of One Increment

By
Model representation to be submitted to Head of the office for grant of One Increment Government servants are aware that the Ministry of Finance and Railways, both have already issued orders for grant of one increment in the pre-revised pay scale to nullify the anomaly in respect of central government employees who were in receipt of pre-revised increment between February 2006 to June 2006. A model representation requesting the concerned head of Office for grant of one increment and drawl of arrears is published below for ready use. MODEL REPRESENTATION FOR GRANT OF ONE INCREMENT From : To, Sir / Madam, ·   Sub: Officers who were due to get heir annual increment between February to June during 2006 – Grant of additional increment as one time measure- Request for sanction and drawal of arrears – Reg. Kind reference is invited to the Ministry of Finance, Department of Expenditure O.M.No.10/02/2011- E.III/A dated 19th March, 2012 wherein all the centra...
Post a Comment
Read more>>

Cabinet approves Implementation of the recommendations of 7th Central Pay Commission

By
  The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the implementation of the recommendations of 7 th  Central Pay Commission (CPC) on pay and pensionary benefits.   It will come into effect from 01.01.2016. In the past, the employees had to wait for 19 months for the implementation of the Commission’s recommendations at the time of 5 th  CPC, and for 32 months at the time of implementation of 6 th  CPC.  However, this time, 7 th  CPC recommendations are being implemented within 6 months from the due date. The Cabinet has also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid in the next financial year.  The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pe...
Post a Comment
Read more>>
By
ENHANCEMENT OF FINANCIAL POWERS OF HSG, HSG-II AND LSG POST MASTERS ( THESE ORDERS ARE IN FORCE. NO REVISION TAKES PLACE SINCE 21 YEARS) A reference is invited to Circular No.62-8/64-CI dated 20.10.1965 delegating financial powers to HSG and LSG Postmasters to incur expenditure of a contingent nature on the following items: a) Replacing, repairing, cleaning, oiling, shifting of electric lights and fittings, fans etc. of the office in a rented building when the charge is a Government liability. b) Repairs of Department bicycles. c) Purchase of earthen pots, glass tumblers, dusters, brooms etc. d) Purchase and repairs to furniture. e) Emergent arrangements for conveyance of mails. 2. The question of enhancement of the powers were being examined in the Directorate in view of the rise in the prices and it has been decided to enhance the powers given to HSG & LSG Postmasters from Rs.30 & Rs.20/- respectively on each occasion to Rs.60/- & Rs.40/- respectively on each o...
1 comment
Read more>>