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The Finance Ministry has clarified that interest rates on small savings schemes, except Public Provident Fund, will remain fixed and not floating.
The rate prevailing at the time of investments in small savings schemes will remain fixed and unchanged till the maturity of the investment. Any revision in interest rates in subsequent years will only be applicable to the investment made in the relevant period, the Finance Ministry said in a statement on Wednesday.
The only exception to this would be PPF, where the interest rate is set every year and will be applicable to all accounts.
For instance, the interest payable for an instrument, other than PPF, on January 1, 2011 will remain valid till the maturity of that instrument, regardless of any interest rate revision with effect from April 1, 2012.
Interest rates on small savings schemes were last revised by the Government on December 1 last year. There was misconception that the revised rates are floating and that they change with the fluctuations in the yield on Government securities.
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