No increase in small savings, PF rates: Chidambaram
August, 02nd 2006
The Finance Minister, Mr P. Chidambaram, on Tuesday ruled out any increase in the interest rate on small savings, employees provident fund and pension fund.
The Minister said in the Rajya Sabha that there was no proposal to raise interest on small savings and provident fund.
The Finance Minister's view comes in the wake of the interest rate hike effected by the Reserve Bank of India last week. The central bank had increased its benchmark interest rate by a quarter percentage point to 6 per cent, a four-year high.
The Central Government had cut interest rate on small savings to 8 per cent in 2003 and has not revised it since. In January, the Government had cut the rate on the Employees Provident Fund , the country's biggest pension fund, to 8.5 per cent for the current fiscal as against 9.5 per cent last fiscal.
Stating that the Government was working to rein in the Budget deficit, the Minister said that this year's deficit was wider because of higher expenditure on roads, ports and other infrastructure. During the first three months ended June 30, the deficit had reached 52.3 per cent of the year's target.
Mr Chidambaram also said that Indian banks were facing restrictions in opening new branches in the US. "US Federal Reserve follows a rather restrictive policy in granting foreign banks permission for opening branches," he said.
The Finance Minister said the Government would continue to raise with the US authorities the need to give Indian banks more licences to open branches and said that reciprocity would be a consideration in dealing with this matter.
The Finance Minister said different countries have different regulations for allowing foreign banks to do business. These range from restricting the form of presence to discrimination in matters of capital adequacy and restrictions on dealings in foreign exchange.