- Date : 30/06/2023
- Read: 3 mins
Exciting news for savers! Are you curious about how PPF interest rates are set to rise, amplifying your earnings? Get ready to reap the rewards next quarter!
- PPF interest rate revision today
- PPF interest rate static since Apr 2020
- Other small saving schemes see 10-70 bps hike
- RBI raised repo rate by 2.5% since May
As the new financial quarter approaches, speculation is rife about potential changes in the interest rates of small savings schemes, including the Public Provident Fund (PPF). With the current PPF deposits yielding a return of 7.1%, investors and account holders are keenly awaiting the government's decision on whether there will be an increase in the PPF interest rate for the July-September quarter. This article delves into the possibilities and implications of such a change, providing insights into how it could affect your PPF account returns.
PPF interest rate revision: When will it happen?
The interest rates of small savings schemes, including the Public Provident Fund (PPF), are scheduled to be revised today, June 30, 2023. Currently, PPF deposits earn 7.1% interest.
PPF interest rate
Given below are some factors to consider for an interest rate hike:
- PPF interest rates unchanged since April 2020.
- PPF interest rate unchanged, while other small saving schemes witness a 10 to 70 bps hike from April 2023.
- RBI raised the repo rate by 2.5% since last May. Investors anticipate PPF interest rate hike in the upcoming review.
How PPF interest is calculated?
Small savings schemes' interest rates are tied to the yields of 10-year Government Securities in the secondary market. The central government reviews them every quarter, using set formulae based on the previous three months' average G-Secs yields with comparable maturity. This approach ensures that small savings schemes' interest rates remain market-linked, as per the Shyamala Gopinath Committee's 2011 recommendations.
Experts: PPF interest rate to follow benchmark yield
As per the Finance Ministry's formula, PPF's interest rate should ideally be 7.55% based on the average 10-year G-Sec yield. However, the gradual decline in the benchmark yield has raised doubts about a PPF rate hike. Experts suggest that the PPF interest rate typically follows the benchmark yield, and with the RBI’s repo rate hike pause and falling inflation, it is unlikely to see an increase in the upcoming review.
Also Read: Good news: Interest rates hiked on small saving schemes. Check new rates from 1 April 2023.
As the new financial quarter approaches and investors eagerly await the PPF interest rate revision, there are both positives and negatives to consider. The potential hike in the PPF interest rate can be seen as a positive aspect for investors, as it may result in higher returns and boost savings. However, the continuous unchanged PPF interest rates since April 2020 may have left some investors hoping for a much-awaited increase. Additionally, the recent decline in the benchmark yield raises doubts about an immediate rate hike, which could be perceived as a negative for those seeking higher returns.
