Adding joy to the retail investors, Government of India has decided to raise the interest rates on PPF (Public Provided Fund) and NSC deposits with effect from 1 April 2012.
Specific details are as follows:
1. Interest provided on PPF deposits would be increased from current 8.6% to 8.8%;
2. NSCs of 10 year duration would now earn 8.9% instead of current 8.7 %;
3. NSCs of 5 year duration would now attract 8.6% instead of current 8.4%;
4. Post office Monthly Income Scheme would attract 8.5% instead of 8.2%;
5. Post office term deposits of one and two year duration will earn 8.2 percent and 8.3 percent interest respectively;
6. Recurring deposits of 5 year tenure will fetch an interest of 8.4 % instead of current 8 %;
7. Interest rates on Senior Citizens Savings Scheme (SCSS) has been increased to 9.3 % from 9 %;
8. Post office saving rate has been maintained at 4%.
In sharp contrast, interest rate on Employee Providend Fund account have been reduced from 9.5% to 8.25% this year. Does that mean that people should start shifting their funds from PF to other attractive interest bearing securities ? Probably not. You would have realised that the government tinkers the interest rates on a yearly basis on these securities and you might end up shifting your PF balance to PPF and realise that next year PPF’s interest may be reduced lower than PF’s interest rate. Hence stay put with your PF account and avoid any temptations to switch your PF balance to any other securities / PPF account. Have a read of our article Provident Fund (PF) – Best Investment Option Available for Salaried Employee !