Small savings collections turn negative

The high interest rates being offered by banks seem to be luring people away from the small savings schemes such as PPF and NSC. A Finance Ministry report tabled in Parliament on Tuesday says that the net small savings deposits turned negative in the first quarter of the fiscal 2011-12. “The decline in small collection has impacted Government cash management,” the report says. No specific reason has been given for the net outflow. Barring special schemes for senior citizens, various small savings offer interest rates between 3.5 and 8.41 per cent. The interest rate on the 5-year senior citizen special scheme is over 9 per cent. In comparison, the public sector banks are offering much higher rates, adding another 25 to 50 basis point for senior citizens.

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