Ppf interest rate: Can the interest available on public provident fund be reduced? Currently, 7.1 percent interest is being received on PPF. Will the impact of the repo rate decrease and other reasons will be seen at the interest rate of the small saving scheme. Will the government reduce interest from 7.1% to 6.50% percent on PPF? The government is going to review the interest rates of small savings schemes on 30 June 2025. It includes several schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS). There has been no change in the interest rates of these schemes since the beginning of the year, but now they are feared to be cut. The reason for this is that so far this year the Reserve Bank has cut the repo rate by 1%, which has brought down the fixed deposit as well as the bond yield.
Currently, PPF is getting an interest of 7.1%, which is near the lowest level in the last 50 years. The last time before 1974, the interest rate was less than 7%. If it cuts this time, this rate can go below 6.5%, which may be disappointing for investors.
Will 6.5% interest be available on PPF?
The government considers the average yield of a 10 -year government bond to be the basis for fixing the PPF interest rate and adds a margin of 0.25% on it. The 10 -year bond yield has been around 6.319% in the last quarter. Add 25 basis points to it, the new rate of PPF is 6.569%. However, it is not necessary that this formula should be considered. That is, the government depends on the government or not, or not.
Will the scheme be attractive for middle class?
Meanwhile, it is also important to note that PPF is a long -term scheme, in which the money is locked for 15 years. The government wants to keep it stable and reliable investment options, so that the scheme remains attractive for middle class and retirement planning.
Will the government cut small savings scheme?
Some experts believe that even though the bond yield has come down, the government can avoid a huge cut in interest rate. The reason for this is that the return of PPF is already less than other schemes such as Senior Citizen Scheme (8.2%), Sukanya Yojana (8.2%) and Kisan Vikas Patra (7.5%). If the rate of PPF decreases further, investors can turn to other options.
When did you get less than 7% interest on PPF?
Also, the interest rate on PPF remains at 7.1% from 2020, while the market rates have changed a lot during this period. This may also mean that the government did not want to affect the savings of the general public despite the market pressure. Talking about history, PPF started in 1968 and in the first few years the interest rate was around 5%. From 1974, this rate went above 7% and then it continued to increase for the next several decades. Between 1986 and 1999, the interest rate reached 12%. But after that it continued to fall.
Now the government will take a decision on interest rates in view of the latest situation on 30 June. If you are planning to invest in PPF or any other small savings scheme, it can be a wise decision to invest before June 30, so that the profit can be locked at the current rate.
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