PPF 1968 and SCSS, 2004 -Revision of interest rates wef from 01.04.2014

RBI/2013-14/526

DGBA.CDD. No. 5342 /15.02.001/2013-14

March 21, 2014

The Chairman and Managing Director/Managing Director

Head Office, Government Accounts Department

State Bank of India/State Bank of Bikaner & Jaipur/

State Bank of Hyderabad/State Bank of Mysore/

State Bank of Patiala/ State Bank of Travancore/

Andhra Bank/Allahabad Bank/Bank of Baroda/Bank of India/

Bank of Maharashtra/Canara Bank/Central Bank of India/

Corporation Bank/Dena Bank/Indian Bank/ Indian Overseas Bank/

Oriental Bank of Commerce/Punjab National Bank/Punjab & Sind Bank/

Syndicate Bank/UCO Bank/Union Bank of India/United Bank of India/

Vijaya Bank/IDBI Bank Ltd./ICICI Bank Ltd.

Madam/Dear Sir,

Public Provident Fund Scheme, 1968 (PPF Scheme, 1968) and

Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of interest rates

Please refer to our circular RBI/2011-12/359 dated January 20, 2012 regarding interest rates on small savings schemes, wherein it was indicated that as per Government’s decision on revision of interest on small savings schemes, the interest rates on various small savings schemes for every financial year will be notified by the Government before April 1st of that year.

The Government of India has now vide their Office Memorandum (OM) No. 6-1/2011-NS.II dated 4th March 2014, advised the rate of interest on various small savings schemes for the financial year 2014-15. Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2014-15, effective from April 01, 2014, on the basis of the interest compounding/payment built-in in the schemes, will be as under:

The contents of this circular may be brought to the notice of the branches of your bank operating the PPF, 1968 and SCSS, 2004 schemes. These should also be displayed on the notice boards of your branches for information of the PPF, 1968 & SCSS, 2004 subscribers.

Yours faithfully

(Shrikant Hamine)

Clarification on regulation of interest rates for Small Savings Schemes

RBI/2011-12/359
DGBA.CDD. No.H- 4836 /15.02.001/2011-12

January 20, 2012

The Chairman and Managing Director/Managing Director 
Head Office, Government Accounts Department 
State Bank of India/State Bank of Patiala/ 
State Bank of Bikaner & Jaipur/State Bank of Travancore/ State Bank of Hyderabad/ 
State Bank of Mysore/ Andhra Bank/ Allahabad Bank/Bank of Baroda/Bank of India/ 
Bank of Maharashtra/Canara Bank/Central Bank of India/ 
Corporation Bank/Dena Bank/Indian Bank/ Indian Overseas Bank/ 
Punjab National Bank/Syndicate Bank/UCO Bank/
Union Bank of India/United Bank of India/ Vijaya Bank/IDBI Bank Ltd./ICICI Bank Ltd.

Dear Sir/Madam,

Clarification on regulation of interest rates for Small Savings Schemes

As per the decision of the Government on the recommendations of the Committee for Comprehensive Review of National Small Savings Fund (NSSF), the rate of interest on small savings schemes will be aligned with G-Sec rates of similar maturity with a spread of 25 basis points (bps), with two exceptions. The spread on 10 year National Savings Certificate (NSC) will be 50 bps and on Senior Citizens Savings Scheme, 2004 (SCSS, 2004) 100 bps. The interest rates for every financial year will  be notified before April 01st of that year. Notifications on changes in the interest rates, in various small savings schemes with effect from December 01, 2011 have already been issued by Government of India. We have also, vide our circular No. RBI/2011-12/291 dated December 05, 2011 circulated Government’s Notification dated November 25, 2011 indicating change in the interest rate on Public Provident Fund Scheme, 1968 (PPF, 1968).

2. It is observed that news items are appearing in certain sections of the press, which convey an impression that the interest rates on small savings schemes linked to G-Sec rates, are floating in nature and will undergo change depending on the yields on G-Sec during the currency of an instrument.

3. As per the rules of small savings schemes, the rate of interest on an investment made in all schemes except PPF, 1968 on a particular date, remains unchanged for the entire duration of the investment, till maturity, irrespective of the revisions in subsequent years.

4. The above clarification may be brought to the notice of the branches of your bank operating the PPF Scheme, 1968 and SCSS, 2004 advising them to display the same on their notice boards.

Yours faithfully

(P S Ranga Rao)
Assistant General Manager