New Delhi, Mar 12: Government is understood to have decided to slash interest rates on Special Deposit Scheme (SDS) and General Provident Fund (GPF) by 1.0 per cent to 8.0 per cent from April 01, 2003. The move comes hardly two weeks after Finance Minister Jaswant Singh announced a 1.0 per cent cut in small savings and public provident fund rates in the budget for 2003-04. Reserve Bank also reduced the bank savings rate and repo rates by 0.5 per cent after the budget. Official sources said the reduction in rates for SDS and GPF, which is to be notified soon, was in line with the softer interest regime being pursued by the Government and Reserve Bank. The reduction in rates is likely to put pressure on Employees Provident Fund Organisation, which invests 80 per cent of its corpus on SDS.
The high interest rate on EPF at 9.0 per cent offered by EPFO was on the strength of the attractive rate offered on SDS and its surplus at over Rs 100 crore.
Sources said the EPFO rates was likely to be revised in the wake of the reduction in the rate on SDS.
Government reduced rates on small savings and other instruments to lower its interest burden at over Rs 1,10,000 crore this fiscal. The finance minister had also announced a one per cent cut in all fresh Central government loans to states, to tide over their difficult financial situation.

Agriculture credit would also be made cheaper by 2-3 per cent from April 01.

Bureau Report