STOCK MARKET BSE NSE

PPF, KVP Schemes Still Best Bets: Experts

Investors in small savings schemes like PPF and KVP should not be perturbed by the cut in interest rates and continue to invest in these instruments.

Published: 19th March 2016 05:05 AM  |   Last Updated: 19th March 2016 07:42 AM   |  A+A-

NEW DELHI:  Investors in small savings schemes like PPF and KVP should not be perturbed by the cut in interest rates and continue to invest in these instruments.

Today, small savings schemes earn higher interest rates compared to bank rates and thus are more attractive. This has been adversely affecting deposit collection of banks. The difference between the interest rates on small savings schemes and banks is 1-2 per cent. Banks find it difficult to pass on the rate cut by Reserve Bank of India (RBI), due to stiff competition from government saving schemes.

Analysts say investing in these instruments is still safe, since the government and RBI keep a watch on them. Interest rates do not work in isolation. They are connected to inflation — it is the rate at which the prices of goods and services change over time.

Inflation is controlled through interest rates. If the interest rates are higher, it means households will pay more interest on their EMIs, which means they have less money to spend for other goods. If interest rate is cut, households will have more to spend.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp