The central government is likely to announce the interest rates of Public Provident Fund (PPF), Senior Citizen Savings Schemes (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), Post Office Monthly Income Scheme (POMIS) and other small savings schemes for the July-September quarter 2024 by June 30, 2024.
How is the interest rate of PPF calculated? Interest rates of the small savings schemes — PPF, SCSS, SSY and others — are linked to market yields of the 10-year government securities in the secondary market. There are set formulae for mark-ups over the average yield of relevant G-Secs of comparable maturities during three months prior to each quarter.
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The central government reviews the interest rates of small savings schemes every quarter based on the average G-Sec yield of the last three months. This is in line with the recommendations of the Shyamala Gopinath Committee, 2011 to ensure that the interest rates of small savings schemes are market-linked.
According to the formula notified by the Ministry of Finance in 2016, PPF has a spread of 25 bps over the benchmark yield. The benchmark 10-year bond yield has averaged 7.02% from March to May 2024, according to data from Investing.com. Going by the formula, the interest rate of PPF will be 25 basis points higher than the average 10-year G-Sec yield of the corresponding maturity. So
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