What is PPF Interest Rate ?

PPF or Public Provident Fund is a popular long term savings cum investment alternative in India. Financial institutions and banks in India offer it and it is classified as a type of product because it assists with tax savings, assuring safety and getting returns in terms of interest as well to investors.

The PPF i.e. Public Provident Fund was launched as a investment-cum-tax saving instrument in the country with the vision of mobilizing small savings by offering reasonable returns along with income tax benefits. The PPF scheme comes with a long tenure of 15 years which helps to save a large corpus over the long term through regular contributions via installments or a lump sum deposit every financial year. The current interest rate, which is for Q4 (January – March) FY 2020-21 has been fixed at 7.1%.

Latest or Present PPF Interest Rate

The PPF interest rates are decided and set by the Indian government every quarter. The current interest rate i.e. for the First quarter of FY23 (April’22 to June’22) for PPF has been fixed at 7.1%.

Following is a table with the current PPF interest rate since 2019:

Investments made in the PPF account are offered at an interest rate set by the Indian Government which is subject to revisions every quarter i.e. every 3 months in a financial year.

PERIOD	INTEREST RATE
April to June 2022	7.1%
Jan to Mar 2022	7.1%
Oct to Dec 2021	7.1%
July to Sept 2021	7.1%
April to June 2021	7.1%
Jan to March 2021	7.1%
Oct to Dec 2020	7.1%
July to Sept 2020	7.1%
April to June 2020	7.1%
Jan to Mar 2020	7.9%
Oct to Dec 2019	7.9%
July to Sept 2019	7.9%
April to June 2019	8%
Jan to March 2019	8%

PPF Monthly Interest Calculation

The interest on PPF is paid on the lowest balance observed in the account from the 5th to the last day of each month. Hence, it is very important that an individual make a PPF contribution before the 5th of every month.

For instance, if the individual’s account balance is 0 until the 10th of April 2020, he will not get any interest in the given month. Therefore, the interest calculation will start in May 2020. On the other side, if the individual has made his contribution well before the specified date, the interest earned will be more. (Interest rates are subject to change by the government on a quarterly basis.)

Annual Compounding

PPF interest is compounded annually which signifies that the interest received on accumulated balance in the PPF account in the past year will be clubbed to the investors’ principal amount and therefore, will also earn interest in the current year.

For instance- Let’s assume that the investor has a corpus of Rs. 10 Lakh in his PPF account and he/she receives an interest of 8% per annum.

The interest amount that the investor will receive in the year comes out to be Rs. 80,000 (8% of 10,00,000)
Now for the coming year, the principal amount will be taken as Rs.10,80,000 and the interest for the subsequent year will be calculated on this sum.
Now, if the returns remain the same i.e 8% in the next year, the interest will be 86,400 i.e. 8% of Rs.1,08,000.
This sum will then be added to the principal amount for the subsequent years and so on.

PPF Interest Upon Maturity

The interest earned on a Public Provident Fund account, as stated above, shall be calculated for the calendar month on the lowest balance in the account between the close of the 5th day and the end of the month. This interest is credited to the PPF account of the investor at the end of each financial year. This interest earned is tax-free in the purview of the Income Tax Act 1961.

PPF Interest After Death

In case of the unfortunate death of the investor, the beneficiary/nominees must get the account transferred under their name. It must be noted that a beneficiary or nominee cannot make any additional contributions to the account, in the name of the demised. Nevertheless, if the amount is not withdrawn, the account can continue to earn returns after the demise of the individual.

The PPF account passes to the beneficiary/nominees in accordance with the nomination specified by the investor in the account opening form. If the investor has mentioned a specific share to be given to the nominee (say 70% for each nominee), the account will be transferred to them accordingly. The nominees will hold the money in trust for the legal heirs of the demised.

PPF Interest for Senior Citizens

Senior citizens get the same returns on the Public Provident Fund as younger Indians. However, they can earn higher returns on senior citizen-oriented products such as PMVVY i.e. Pradhan Mantri Vaya Vandana Yojana, and SCSS i.e. Senior Citizens Savings Scheme.

Eligible Banks for Opening a PPF Account

PPF Banks

Given below is a list of the public sector banks that allow you to open a PPF account-

State Bank of India
PNB
Canara Bank
Indian Bank
UCO Bank
Bank of Baroda
Bank of India
Allahabad Bank
Union Bank of India
Central Bank of India
Andhra Bank
Corporation Bank
Dena Bank
Indian Overseas Bank
Syndicate Bank
UCO Bank
United Bank of India
IDBI Bank
Vijaya Bank

Given below is a list of the private sector banks that allow you to open a PPF account-

Axis Bank
HDFC Bank
ICICI Bank

Frequently Asked Questions

Q. Is PPF interest rate fixed? Which bank gives the highest ppf interest rate?

A. Absolutely YES, The PPF interest rate is fixed and announced by the Ministry of Finance of India and the same rate is applicable to all the PPF accounts offered across India irrespective of whether the account is held with a post office or a bank. The interest rate of these PPF accounts are reviewed on a quarterly basis by the Ministry and government and is subject to changes on a periodic basis. The current rate of 7.1% per annum has remained unchanged since 2nd quarter of 2020.

Also Read:

Current Post Office Fixed Deposit Interest Rates
Post Office Saving Schemes in India
Online Amfi Registration Number