Was PPF interest rate hiked for the October-December 2022 quarter?
The government increased the interest rates of certain small savings schemes. According to a circular issued by the Finance Ministry on September 29, the interest rates of three small saving schemes have been hiked by 10 bps to 30 bps , for the October-December 2022 quarter(One percentage point is equivalent to 100 basis points.) Interest rate of Senior Citizen Savings Scheme has been hiked by 20 bps to 7.6% and Kisan Vikas Patra has been increased by 1o bps to 7%. The interest rate of post office time deposit with a tenure of 3 years has been raised by 30 bps to 5.8% and 2-year tenure by 20 bps to 5.7%.The government has kept the interest rates on small savings schemes like the PPF unchanged. That means for the quarter ending December 31, 2022, the PPF will earn an interest rate of 7.1%.
Under The Public Provident Fund Scheme Act of 1968, a PPF account may be opened only by Indian citizens. However, an individual may register a single PPF account on behalf of each minor or incapable person over whom he has guardianship. PPF account can be opened in a bank or with the post office.
Who cannot open PPF account
A PPF account cannot be opened in a HUF's, Trust's, or NRI's name. However, a resident who later changes their status to non-resident Indian throughout the period of time for the fund's maturation specified by the Public Provident Fund Scheme may still contribute to the fund until it matures on a non-repatriation basis. Can an illiterate person open a PPF accountAccording to the PNB FAQ on PPF, “There is no bar in opening a PPF account by an illiterate subscriber. For this purpose the thumb impression of the subscriber will be attested by a respectable person known to the Accounts Office/Bank. The procedure for opening a savings account by a illiterate depositor will be followed. The blind person will be treated as illiterate subscriber. The attestation should be in the following terms:- “The subscriber is known to me and his thumb impression/mark has been affixed in my presence.”
Minimum & maximum limit
Maximum investment which can be made in a financial year is Rs. 150000 and a minimum investment Rs 500.
How the PPF interest is calculated.
According to the PNB FAQ page on PPF, “For any given month, investments made on or before the 5th will be considered for interest calculations for that month. Interest is calculated on the lower of the balance held on the 5th of a month to the end of the month. For e.g. An account held Rs.1 lakh at the start of month. The account holder decided to invest Rs.50,000. He did so on 10th of the month. In this case, the balance on the 5th of the month was Rs.1 lakh and was Rs.1.5 lakhs at month-end. Here, Rs.1 lakh is the amount that will be considered for calculation of interest. The additional investment of Rs.50,000 would be considered for the next month. If, however, the account holder had deposited the additional Rs.50,000 on 3 rd of the month, the balance on the 5th of the month would have been Rs.1.5 lakhs. This would have been the amount considered for interest calculations for that month.”
When PPF account will be discontinued
According to the India Post website, “If in any financial year, minimum deposit of Rs.500/- is not made, the said PPF account shall become discontinued. Discontinued account can be revived by the depositor before maturity of the account by deposit minimum subscription (i.e. Rs. 500) + Rs. 50 s default fee for each defaulted year.” Also on discontinued accounts, there is no loan or withdrawal options will be available.
This story originally appeared on: India Times - Author:Faqs of Insurances