FAQ Style Article

Small savings interests changed – How does it this affect you?

In Uncategorized on March 11, 2016 at 8:18 am

Indian Govt has changed terms and conditions of certain small savings schemes effective 1, April, 2016. In this blog, let us explore what this means to many popular funds.

PPF – Changes
1.Interest
– Rate – Govt Securities (G-Sec) +  0.25%
2.Premature closure now possible –
– In genuine cases – Serious ailment, higher education of children etc,.
– A penalty of 1% reduction in interest payable on the whole deposit
– Only after five years from the date of opening.

NSC Changes
1. Interest
– Compounded annually rather than every six-months
– G-Sec of comparable maturity + 0.25%

KVP changes
– Compounded annually
– G-Sec of comparable maturity + 0.0 % (No premium over govt securities)

Overall changes
– Interest rate re calibrated on a quarterly basis
– For example – Rates of interest applicable for the quarter from April to June 2016 effective from 1.4.2016 would be notified in March, 2016

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