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May 2020
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Need to find a way to outlast Pujara in summer series: Cummins        La Liga can resume week of June 8 - Spanish Prime Minister        Extend loan automatically to all eligible borrowers without fear of 3Cs: FM to banks        Will try to restart international flights before August: Puri        Iran warns US not to interfere with Venezuela oil shipment        Sri Lanka to ease coronavirus restrictions from May 26        Coronavirus cases cross 10,000-mark in Ahmedabad, 24 deaths        Amphan toll rises to 85 in Bengal; protests over electricity, water supply        Prisoners aged above 60 to be released on emergency parole to decongest jail in Delhi        Record jump in COVID-19 cases, 137 more deaths        Bryant items fetch premium prices, Trout card sets record        Baseball players respond to MLB on virus protocols        RBI extends moratorium on loans for another 3 months till Aug        Sensex, Nifty turn choppy; RIL jumps on KKR deal        Quarantine must for domestic air travellers: Kerala govt        At least 57 killed in Pakistan passenger plane crash in Karachi        China introduces new security bill in parliament to tighten controls over Hong Kong        Trump lashes out at scientists whose findings contradict him        COVID-19 death toll climbs to 3,583 in India        Pak troops shell LoC areas in twin sectors of Poonch, Rajouri        
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Business News
Govt may cut rate on small savings schemes in next quarter
 
New Delhi: The government is considering rate moderation for small savings schemes in the upcoming quarter, a development that could lead to speedier transmission of monetary policy rate cuts, sources said.

During the current quarter, the government refrained from cutting interest rates on small savings schemes, such as Public Provident Fund (PPF) and National Savings Certificate (NSC), despite moderating bank deposit rates.

Bankers have been complaining that high rates on small savings schemes prohibit them from cutting deposit rates.

Currently, there is a difference of nearly 100 basis points between deposit rate of banks and small savings rate for one-year maturity.

Earlier this week, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) will take a call on an interest rate cut and all options were on the table to counter the coronavirus blow.

Last month, the governor in an interview with PTI said, "We have said it in MPC resolution that there is a case for reducing the small savings rates and aligning it more with the formula-based rate fixation. We have referred to it in the MPC resolution."

The MPC in its February Bi-monthly Monetary Policy Statement said that while there is a need for adjustment in interest rates on small saving schemes, the external benchmark system introduced from October 1 last year has strengthened the monetary transmission.

The finance ministry has been nudging public sector banks to pass the whole repo rate cuts to retail loans for pushing consumption. Banks have resisted it fearing their margin will take a hit in case of 100 per cent transmission.

Rates on small savings schemes are revised on quarterly basis.

On December 31, 2019, the government decided to keep interest rates for small savings schemes like PPF and NSC unchanged at 7.9 per cent for the fourth quarter of the current financial year, while the rate for the Kisan Vikas Patra maturing in 113 months was kept at 7.6 per cent.

The interest rate for 5-year Senior Citizens Savings Scheme was retained at 8.6 per cent, while that for savings deposits was kept unchanged at 4 per cent a year. The interest on the senior citizens' scheme is paid quarterly.

However, the government had said that during the January-March 2020 quarter, the Sukanya Samriddhi Yojana will offer 8.4 per cent rate.


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