The government on Tuesday slashed interest rates on small savings schemes, including National Savings Certificate and Public Provident Fund, by up to 1.4 per cent for the first quarter of 2020-21, in line with moderation in bank deposit rates.

Interest rates for small savings schemes are notified on a quarterly basis.

With the reduction, term deposits of 1-3 years will now fetch an interest rate of 5.5 per cent from the existing 6.9 per cent, down 1.4 per cent, according to a notification by the finance ministry.

Interest rates are paid quarterly, while the five-year term deposit will earn 6.7 per cent from the current rate of 7.7 per cent.