Friday, November 25, 2011

PPF and Post Office interest rates to increase

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The government has announced higher interest rates for investments in PPF and schemes operated by post offices from 1 December, 2011.

Interest rates on public provident fund (PPF) will increase from 8% to 8.6% per annum. The government has also raised ceiling on annual contributions to the fund from Rs 70,000 to Rs one lakh.

Interest rates on savings account in post offices would also go up to 4 per cent from 3.5 per cent at present. Similarly, interest rates on deposits of other maturities too would be raised from December. In addition to this, the maturity period of monthly investment schemes (MIS) and national savings certificates (NSC) would be reduced from six to five years. MIS would earn an interest of 8.2 per cent, but accounts opened on or after 1 December, 2011 would not be entitled for bonus.

The government has announced discontinuation of the sale of Kisan Vikas Patras (KVP) from 30 November, 2011.

These decisions were long due as the bank fixed deposits are offering around 10% interest rate. Even the provident fund has been giving higher rates for the last few years. This is good news for investors as they can invest in PPF or NSC for getting tax benefit under Section 80c and also earn higher return.
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