Public Provident Fund Update: Has Govt Hiked PPF Interest Rate For Oct-Dec Quarter?

The small savings scheme interest rates for the October-December 2023 quarter have been finally published by the government. For the quarter ending December 31, 2023, the government raised the interest rate on just one small savings. Except for a marginal hike in five-year recurring deposit rates, the Finance Ministry on Friday kept small savings interest rates steady.

The Public Provident Fund (PPF) is left unchanged at 7.1%. In April-June 2020, PPF interest rate was cut to 7.1% from 7.9%. Before that, it was reduced in July-September 2019. The interest rate for PPF was last raised in October-December 2018 to 8% from 7.6%.

The interest rates in schemes like the Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), Kisan Vikas Patra (KVP), and Sukanya Samriddhi Account Scheme (SCSS) have been unchanged.
The Public Provident Fund is a government-backed long-term investing scheme that offers security in the form of attractive interest rates and tax-free returns.

What is the Formula for PPF interest rate?

As per the government-notified formula, the PPF has a spread of 25 basis points (bps) over the benchmark yield. According to Investing.com, from June to August 2023 the benchmark 10-year bond yield has averaged 7.14%. Thus, according to this formula, the PPF interest rate needs to be 25 bps higher compared to the average 10-year G-sec yield of the corresponding maturity. Going by this, the PPF rate should ideally be 7.39%.

Is PAN- Aadhaar mandatory for investments in the Public Provident Fund?

The Finance Ministry has made PAN and Aadhaar IDs mandatory for investments in the Public Provident Fund (PPF).

Does the RBI's rate decision impact interest rate on small savings schemes?

The Reserve Bank of India's (RBI) decision to keep the repo rate unchanged has left limited room for an upward adjustment in small savings schemes.

Here's the revised rates offered by small savings schemes for the October-December 2023 quarter:

Post Office Savings Account - 4%
Post Office Recurring Deposit - 6.7%
Post Office Monthly Income Scheme -7.4%
Post Office Time Deposit (1 year) - 6.9%
Post Office Time Deposit (2 years) - 7%
Post Office Time Deposit (3 years) - 7%
Post Office Time Deposit (5 years) -7.5%
Kisan Vikas Patra (KVP) - 7.5%
Public Provident Fund (PPF) - 7.1%
Sukanya Samriddhi Yojana - 8%
National Savings Certificate - 7.7%
Senior Citizens' Saving Scheme (SCSS) - 8.2%