PPF Update: Will you get more interest on investing in PPF? Understand how much benefit can be obtained from April 1

Public Provident Fund: In small saving schemes, the craze among investors regarding Public Provident Funds is continuously increasing. According to a research report by ICICI Securities, the share of the Public Provident Fund in household savings increased from 19 per cent to 22.7 per cent between FY 2019 and FY 2022. However, the interest rate has remained unchanged at 7.1 per cent for the last three years. Recently EPFO has increased the interest rate on Employee Provident Fund by 5 basis points to 8.15%. Due to the increase in the repo rate, the interest on fixed deposits is up to 7-7.5% on average. In such a situation, it is expected that on March 31, the government can increase the interest rate to make PPF attractive.

How is the interest rate decided?
Certified financial planner Taresh Bhatia told in a special conversation that on March 31, a decision will be taken regarding the interest rate for all small savings schemes. Presently Public Provident Fund is getting 7.1% interest (Public Provident Fund Interest Rates). The interest is calculated on an annual compounding basis. A notification was issued in 2016 by the Finance Ministry. Accordingly, the interest of PPF, Sukanya Samriddhi Yojana and Senior Citizen Saving Schemes (SCSS) is decided based on the 10-year benchmark bond yield.

The interest rate on PPF may increase by 50bps
The expert said that the 10-year benchmark bond yield on March 30, 2023, is 7.37 per cent. The interest rate of the Public Provident Fund should be at least 25 basis points higher than this. In this way, the minimum interest rate comes to 7.62 per cent. Right now the interest rate is 7.1 per cent. On this basis, an increase of 50 basis points is possible from the current rate.

The inflation factor is also important
He said that apart from this, many factors are also important in deciding the interest rate. Inflation has increased. Individuals are getting 7-7.5 per cent interest on fixed deposits and senior citizens are getting more than 8 per cent interest. The interest rates for EPF, Sukanya Samriddhi and Senior Citizen Savings Schemes are 8.15 per cent, 7.6 per cent and 8 per cent, respectively.