From April 2020, interest is being paid on PPF at the rate of 7.1 percent. It remained unchanged for another three months.
New Delhi: The Center has kept the interest rate on the Public Provident Fund (PPF) unchanged for 39 consecutive months. The interest rate of this scheme, which is most popular among the middle class with small savings, remains at 7.1 percent this year. The Union Finance Ministry on Saturday announced revised interest rates on small savings for the first quarter (April-June) of the financial year 2023-24. The interest rate has been kept unchanged at 4 percent in the post office savings account also. The new interest rate will be effective from April 1.
However, in some cases of Post Office Small Savings Schemes, the increase in interest rate is considered insignificant by the customers. One-year term deposits increased from 6.6 to 6.8 percent, two-year term deposits increased from 6.8 to 6.9 percent, three-year term deposits increased from 6.9 to 7 percent, five-year term deposits increased from 7 percent to 7. 5 percent interest rate. Besides, the interest rate on five-year recurring deposits increased from 5.8 percent to 6.2 percent, monthly income scheme (MIS) from 7.1 to 7.4 percent, National Savings Certificate (NSC) from 7 percent to 7.7 percent. and increased from 7.6 to 8 percent in Sukanya Samriddhi Yojana. On the other hand, the interest rate on Kisan Bikash Patra increased from 7.2 percent to 7.5 percent. That is, instead of the current 120 months, the money will double in 115 months. Senior citizens will get 8.2 percent interest on savings instead of 8 percent. However, the common man did not get the expected relief in the sky-high inflationary market. It must be remembered that many retirees live on low interest savings.
The interest rate on PPF has not been increased. From April 2020, interest is being paid on PPF at the rate of 7.1 percent. It remained unchanged for another three months. The government runs many schemes for the common man. One of them is Public Provident Fund i.e. PPF. This scheme is under the central government and investors can deposit money in it for a long period of time. Any citizen of the country can deposit a minimum of Rs.500 to a maximum of Rs.1.5 lakh in this account every financial year. PPF account tenure is 15 years.
Notably, last time, the Center had decided to increase the interest rate on small savings schemes by 20 to 110 basis points for the next three months on December 30. At that time there was no change in the interest rate of PPF, Sukanya Samriddhi Yojana. But this time, economists expected more interest on low savings. They feel that there was an opportunity to increase the interest rate in PPF as well. The RBI hiked interest rates by 25 basis points after the Monetary Policy Committee meeting on February 8. Now the repo rate is 6.50 percent. RBI's next monetary policy meeting is scheduled for April 3-6. Experts argue that the RBI may raise the repo rate again in April after retail inflation eased to 6.52 percent in January. That's why they expected the interest rate on small savings schemes to go up a lot.
Moreover, Union Finance Minister Nirmala Sitharaman had already hinted at increasing interest rates on micro savings schemes. He announced the launch of the 'Mahila Samman Amanat' scheme in the budget. Where 7.5 percent interest per annum will be given on the deposit for two years. Interest paid in small savings scheme is less than that. Due to which the interest rate is expected to increase.
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