PPF Interest Rate: Current Rate, History, and How to Calculate

A Public Provident Fund (PPF) is considered as a dependable long-term investment option. Investment in PPF is backed by the Government of India with assured returns. Further, PPF offers a comparatively higher interest rate than a fixed deposit with interest being compounded annually. The minimum tenure of PPF is 15 years with an option to extend the tenure in blocks of 5 years. . Along with tax benefit (deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act), the PPF interest rate is one of the striking features of the PPF scheme.

Since its inception by the National Savings Institute (Finance Ministry) of the Government of India in 1968, the interest rate has varied considerably with the changing economic situations in the country. The Finance Ministry decides the PPF account interest rate. The same interest rate will apply to each bank and post office authorised to provide PPF accounts.

Also Read: How to Check Your PPF Account Balance

Interest on PPF

The Finance Ministry decides the interest rate on PPF on a quarterly basis. The current interest rate is applicable for the quarter ending June 30, 2022. Though the interest rate is decided on a quarterly basis, the interest amount is compounded on a yearly basis in PPF accounts. Parents and legal guardians are permitted to open a PPF account in the name of their children.

The interest rate remains the same for PPF accounts of adults and minors. Non-residents of India (NRIs) are not permitted to open a PPF account. However, if you become an NRI after opening a PPF account, then the interest rate for you will remain the same as that for Indian residents.

Senior citizens will also have the same PPF interest rate as the interest rate for adults and minors.

Read More: Public Provident Fund or PPF: Meaning, Features, and Benefits

The PPF account interest on maturity is the weighted average of all the interest rates that have been applicable over the years for which the account was active.

Current Interest Rate for PPF

The current PPF interest rate stands at 7.1% per annum, as stated by the National Savings Institute. The interest rate has gone through many variations since the beginning of the scheme. The interest rate at the beginning of this scheme was 4.8% per annum. The highest interest rate for PPF registered to date was 12% per annum. This interest rate was applicable from April 1, 1986, to January 14, 2000. Since then, the interest rate has gone through many variations.

PPF Interest Rates for the Past 10 Years

According to the National Savings Institute, the PPF interest rates for the past 10 years have been as follows:

How is the interest on the PPF calculated?

The PPF interest on the account balance is calculated based on the minimum balance between the fifth and the last day of the month. So, it is advised to put money in the PPF account between the 1st and 5th day of the month to gain optimum interest. The interest amount is credited to the account by the end of the financial year.

Also Read: How to Check PF Balance by Missed Call?

What are the different ways to check the current balance of a PPF account?

There are three ways to check the PPF account balance: online, offline, and by phone:

Online method

To check your PPF account balance online, there are two conditions that need to be met. First, you must have internet banking enabled for your savings account. Second, your savings account and PPF account must be linked. If these conditions are met, you can follow the next steps:

• Log in to your bank’s internet banking portal.
• On the dashboard, you will have the savings and PPF account numbers displayed.
• Upon clicking the PPF account number, it will display the balance.
• Some banks only show the primary account number on the dashboard. As you navigate through account options, you will find your PPF account number. Upon clicking the number, you will get the balance.
• There is also an option to see the number of transactions.

Also Read: How to Open a PPF Account? All You Need to Know

Offline method

You can visit your nearest bank branch or post office where you opened your PPF account. Upon opening a PPF account, you get a passbook. This passbook contains various details such as PPF account number, branch details, PPF account balance, and debit and credit transactions. You can update this passbook on a regular basis by visiting the nearest branch. Upon updating the passbook, you will know the current balance in your PPF account.

Phone

You can install the official bank or post office app on your smartphone. Once you log in, you can explore the app to find PPF account details in the same way you checked the balance through internet banking.

Another method to utilise your phone to check your PPF account balance is by giving a missed call on the number provided by the bank or post office where you opened the account. You can also send an SMS to the number provided by the bank or post office. You will receive a reply with your account balance.

Also Read: How to Make PPF Online Payment?

Advantages of Having a PPF Account

1. Investment safety and guaranteed returns 

As the government of India backs the PPF scheme and the investment is not related to market-linked schemes, your investment will remain safe. If you want to invest in a low-risk, tax-efficient and long-term investment instrument, PPF is an ideal option as you will get assured returns.

2. Higher interest rate than a fixed deposit account 

Instead of parking your savings in a fixed deposit account, you can open a PPF account to put your surplus earnings and savings every year. The PPF interest rate is considerably higher than a savings account interest rate.

Read More: What are the Benefits of Public Provident Fund (PPF)?

3. Tax exemptions 

As per the Income Tax Act, 1961, you can claim deductions on investments of up to Rs. 1,50,000 every financial year. under Section 80C.

Closing Thoughts

The PPF interest rate is a major differentiating factor between a PPF account and a fixed deposit account. Owing to a significantly higher interest rate than a savings bank account and long-term savings, you must prefer opening a PPF account to gain assured returns over the long term. The Indian government has complete authority to change the interest rate periodically. You must note that past interest rates have no impact on future interest rates.

FAQs

Which financial organisation gives you the maximum interest rate for a PPF account?

As PPF is a government scheme, the interest rate remains the same for authorised banks and post offices throughout India.

How is PPF interest compounded?

PPF interest is compounded on a yearly basis. The interest amount will be credited at the end of the financial year and added to the principal. For the next financial year, the interest is calculated on the updated account balance which includes interest for all the previous years.

Is the interest rate on PPF accounts for senior citizens different from that for adults?

No, the interest rate is not different for senior citizens. It remains the same for PPF accounts of minors, adults, and senior citizens.

Do NRIs get a different interest rate than Indian residents?

First, NRIs are not allowed to open a PPF account. Secondly, if you become an NRI after opening a PPF account as an Indian citizen, you will get the same PPF interest rate as any other Indian citizen.