Interest rates for PPF might stay unchanged in the next quarter

The Indian government was thinking to reset the interest rates on small savings schemes for the upcoming quarter, but because of several protests from individuals who depend on PPFs and post office deposits to meet their financial needs, the decision has been put on a hold.

The government had moved to rates linked to the market for small savings products like PPF, KVPs and Senior Citizens Savings Scheme, so that the returns can be linked to government bonds in order to avoid these instruments eating into the bank deposit base.

RBI had also demanded this, so that it could help lenders cut rates when deposit rates were lowered. This is why the centre decided to reset interest rates every quarter, which were earlier done annually.

The ongoing quarter has seen the average yield on government securities coming down to around 7.5%; this would have resulted in PPF rates falling to less than 8% as against the present 8.1%.

However, as of now, the government has decided not to change these rates, because inflation is already troubling Indian customers.

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