Finance Ministry cuts small savings interest rates for July-Sept quarter

The stated objective of this move is to reduce cost of capital and enable higher lending and thus boost economic activity

The finance ministry, on Friday, cut interest rates for all but one of the 12 small savings schemes for the July-September quarter. This has been done in a bid to speed up the transmission of interest rates and to reduce cost of capital and enable higher lending and thus boost economic activity.

A notification on the finance ministry website on Friday showed that interest rates for all the small savings schemes, except savings deposits, were reduced by 10 basis points. The savings deposit interest rate was maintained at 4 per cent.

That the interest rates would be cut was expected.