- Date : 18/07/2019
- Read: 3 mins
As the rate of interest on GPF is slashed, learn more about GPF and the changes in interest rates over the years

An official Finance Ministry statement has confirmed that the interest rate for the General Provident Fund (GPF) has been deducted by 10 basis points (bps) from 8% to 7.9%. This was declared on 17 July 2019 and will be effective from the 1 July 2019. The statement added that accumulations to the credit of subscribers to GPF and similar funds will yield an interest rate of 7.9% for the period 1 July 2019 to 30 September 2019. The other similar funds to which this renewed interest rate would be effective are the General Provident Fund (Central Services), the Contributory Provident Fund (India), the All India Services Provident Fund, the State Railway Provident Fund, the General Provident Fund (Defence Services), and the Indian Ordnance Department Provident Fund.
Related: All you need to know about PPF account
What is the basis point?
Basis point is a unit of measure used to describe the percentage change in the value of a financial instrument, which could be charging or yielding interest. One basis point is equal to 0.01% and inversely, a 0.5% change in the rate of interest can be depicted as a change of 50 bps.
What is the General Provident Fund?
As the name suggests, GPF is a type of provident fund account that is maintained for government employees only. Its rate of interest is fixed and changed by the Government from time to time. Every government employee makes a contribution to the fund except when he or she is under suspension.
Related: Top 7 fixed-income investments in India
What are the applicability and features of the GPF?
As mentioned, it is applicable for government employees. However, only government employees hired before 1 January 2004 are eligible for this scheme. Its maturity happens upon the retirement or superannuation of the employee. The Employee and the government each contribute 6% of salary equally towards the fund. The employee can avail loan against the GPF at any time during the career.
Related: Important points you should know before opening a PPF account for your children
How has the rate of interest changed over the years?
If we look at the rate of interest on GPF over the last fifty years, it had barely touched 5% in 1968-69, 5.1% to be more accurate. It improved over the next five years to reach 7.1% in 1974-75. Notably, in 1978, the rate of interest stood at around the present-day rate, 8%. It rallied to reach 10% by 1984-85 and 12% by 1986-87. The dip started at the turn of the millennium falling to 11% in 2001, 9% in 2003 and remaining at 8% for large parts of the last decade. It did touch 8.8% in 2013 and the recent change means that the current rate of interest on GPF is 7.9%. Are you aware of these services EPFO is offering?