The government announced an increase in small savings interest rates of up to 70 basis points from April to June. The PPF plan, on the other hand, has not received the same treatment.
Therefore, the PPF interest rate will remain at 7.1% throughout the remainder of this fiscal year. At this point, the primary concern is whether or not this will make PPF less appealing than other small savings plans.
Importantly, the Sukanya Samriddhi Yojana (SSSY), National Savings Certificate (NSC), and Senior Citizens’ Savings Scheme (SCSS) all offer 8.2%, 7.7%, and 8% for the aforementioned quarter, respectively.
Additionally, the Mahila Samman Savings Certificates (MSSC), which were just introduced, offer 7.5%, which is 0.4% more than the PPF. In the context of high interest rates, certain fixed deposit (FD) schemes are also delivering respectable returns.
In contrast, the PPF rate has not changed since April through June 2020, when it was reduced from 7.9% to 7.1%. In the past, it was cut from July to September of 2019. The most recent increase occurred between October and December of 2018, when it increased from 7.6% to 8%.
Is it possible to increase PPF rates?
The benchmark for PPFs is commonly 25 premise focuses over the ongoing 10-year G-Sec security rates. “The G-Secs were well over 7.25 percent last quarter, and there is space to boost the PPF rates in the future months,” Adhil Shetty, CEO of BankBazaar.com, told CNBC-TV18.com.
While keeping an eye on public opinion or other factors that have no bearing on the economy, it is sometimes necessary to maintain these schemes’ interest rates or increase them. According to experts, PPF rates cannot be increased at this time because they have already been raised in the past.
PPF, which is open to everyone and offers tax-free returns, is one of the best options for debt. While other debt options may have higher rates, PPF’s post-tax returns are superior.
