With the yield of government securities (G-Secs) rising, interest rates on Public Provident Fund (PPF) and other small savings deposits may soon rise. These rates are reviewed quarterly and are set for review by the end of this month. Currently, the interest rate of PPF stands at 7.1 per cent while the yield of government securities has already crossed 7.3 per cent. Amit Gupta, MD, SAG Infotech said, “The interest rate of Public Provident Fund (PPF) may be increased soon.”
There has been no revision in the interest rate on small savings schemes for the last 27 months. The rates were last revised in the April-June 2020 quarter.
Amit Gupta said that there is a direct relationship between small savings investment and government-Sec returns. “That’s why this increase in G-Sec yield will not only increase the interest rate PPF But it will also have an impact on the rates of small savings investment.”
Vivek Iyer, Partner, Grant Thornton India, said that rising inflation globally is a phenomenon that affects the savings of citizens globally. Monetary policy demands that interest rates be increased to effectively manage inflation. If inflation is transitory, the increase in rates is not passed on to savers.
Although, inflation He said it seems that staying here for a while and increasing the PPF rates is the right way keeping in mind the underlying purchasing power that drives inflation out.
Apart from PPF, other small savings products include National Savings Certificate (NSC), KVP, Time-Deposit, Senior Citizen Savings Scheme and Sukanya Samriddhi Yojana.
The interest rates in these small savings schemes are distributed rates and are linked to market returns on government securities with a lag, and are settled at quarterly intervals around and above the G-sec yield of comparable maturity and a spread of 0-100 bps . “It is expected that with the increase in G-Sec yield, investors in small savings products including National Savings Certificate, Time-Deposit, KVP, Public Provident Fund, Sukanya Samriddhi Yojana and Senior Citizen Savings Scheme will also see an increase in their investments. can. rates,” said Amit Gupta.
Latest Interest Rates of PPF, SSY and Other Small Savings Schemes
Public Provident Fund (PPF) – 7.1 percent
National Savings Certificate (NSC) – 6.8 percent
One Year Fixed Deposit Scheme -5.5 percent
Senior Citizen Savings Scheme (SCSC) – 7.4 percent.
Sukanya Samriddhi Yojana -7.6 percent.
Five Year Recurring Deposit – 5.8 percent
Interest rate on savings deposit – 4 percent
Fixed deposits of one to five years – 5.5-6.7 percent
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