PPF Rate Hike: Investors who invest in Public Provident Fund i.e. PPF can get huge rewards. PPF interest rates are likely to be hiked from July to September for the second quarter of FY 2023-24. The Finance Ministry is going to review the interest rates of small savings schemes. Which can be announced today.
There has been no increase in PPF interest rates since April 2020. PPF is currently earning 7.1 percent interest per annum. However, during this period, the central government has increased the interest rates of almost all small savings schemes in the last three quarters, including the Sukanya Samriddhi Yojana.
For April to June, the interest rates of these savings schemes were increased by 10 to 70 basis points. In which the interest rate of NSC i.e. National Saving Certificate was increased from 7 percent to 7.70 percent. The interest rate of Sukanya Samriddhi Yojana has been increased from 7.6 percent to 8 percent. Currently Kisan Vikas Patra is earning 7.5 percent interest per annum and its maturity has been reduced from 120 months to 115 months.
The interest rate of these savings schemes has been increased but the government has not increased the interest rate of PPF. While RBI has increased the repo rate by 2.50 in a year. After which banks have increased the interest rate on FDs, the government has increased its small savings schemes. In such a situation, PPF investors are also hoping for an increase in the interest rate.
There is a formula for determining the interest rates of PPF which was notified by the Finance Ministry in 2016. Under this, interest on PPF is 25 basis points higher than the 10-year bond yield. Currently the bond yield is 7.3 percent. Based on this formula, PPF interest rates should be increased to 7.55 percent.
Urban and rural common Indians invest in savings schemes like PPF as safe. These are the people who rely on investing in these schemes to stay away from the ups and downs of the stock market and also invest to save tax. To maintain the popularity of PPF, the government is under pressure to increase interest rates.
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