The government is likely to maintain the Public Provident Fund (PPF) interest rate at 7.1% for the January-March 2026 quarter, according to sources familiar with the matter, as small savings rates continue to track government bond yields.
Current Interest Rates
Small savings scheme rates for Q4 FY26:
- PPF: 7.1% (likely unchanged)
- Senior Citizens Savings Scheme: 8.2%
- Sukanya Samriddhi: 8.0%
- NSC: 7.7%
- Monthly Income Scheme: 7.4%
PPF Features
PPF remains a popular long-term savings instrument due to its tax benefits. Key features include a 15-year maturity period, EEE tax status, and guaranteed returns.
Comparison with Alternatives
While fixed deposits offer higher rates of 7.5-8%, PPF’s tax-free returns and government backing make it attractive for risk-averse investors.
Investment Limit
The annual investment limit in PPF remains Rs. 1.5 lakh, with contributions qualifying for Section 80C deductions.
Loan and Withdrawal Rules
PPF allows loans from the 3rd to 6th year and partial withdrawals from the 7th year onwards, providing liquidity options.
Rate-Setting Mechanism
Small savings rates are linked to comparable government bond yields with a markup. The quarterly review ensures rates remain market-aligned.
Financial Planning Implications
Financial advisors continue to recommend PPF as a core component of retirement planning, particularly for conservative investors seeking tax-efficient guaranteed returns.
