Public Provident Fund interest rate: The journey of PPF interest rate since its introduction in 1968 has been interesting. While the current interest rate of 7.9 per cent may appear low to some, there was a time when the popular PPF gave a return of 12 per cent. Not for one year, but for 14 years continuously between 1986 and 2000. PPF was introduced by the National Savings Institute of the Ministry of Finance as a savings-cum-tax saving instrument in 1968. In the first year, the PPF interest rate per annum was just 4.8 per cent. It was revised to 5 per cent in 1969-70 and remained the same till 1972-70.
Upward revision of the PPF interest rate was done in 1973-74 and again to 5.8 per cent between April 1, 1974 and July 31, 1974.
Between August 1, 1974-March 31, 1975, the PPF interest rate was raised to 7 per cent. Since then, the PPF interest rate has never gone below 7 per cent. That is, for a record 45 years, the PPF interest rate has remained at 7 per cent or above. Even today, the interest rate on most of the bank FDs can't match the PPF.
You would be surprised to know that the PPF interest rate has remained at 12 percent for a record 14 years between 1986 and 1989. In the last five years, the PPF interest rate has remained between 8.7 percent and 7.9 percent.
Public Provident Fund interest rate since 1968
*Source: National Savings Institute
An individual can invest up to Rs 1.5 lakh in PPF account in a financial year. The minimum amount that can be deposited in a PPF account in a financial year is Rs 500.