Press Information Bureau

Government of India

Ministry of Finance

06-September-2011 18:04 IST

Modification in PPF Scheme : Deposit Limit Raised from Rs. 70,000 to Rs. One Lac while Rate of Interest on Advances Against Deposits in PPF Scheme Raised from 1% to 2 Percentage Points

The Committee on Comprehensive Review of National Small Savings Fund (NSSF) headed by Deputy Governor, RBI has recommended revision of certain provisions of PPF Scheme, 1968 and benchmarking of interest rates on various small savings schemes with the secondary market yields on Central Government securities of comparable maturities with suitable spread.

The Committee has recommended increasing the deposit limit under PPF Scheme from existing Rs. 70,000 to Rs. 1 lakh per annum and fixing of rate of interest on advances against deposits in PPF scheme at 2 percentage points as against the prevailing interest rate on such advances at 1%.

The Committee has further recommended benchmarking interest rate on small saving schemes to interest rate on Government securities of similar maturities with a positive spread of 25 basis points on all schemes except for 50 basis points for 10 year NSC and 100 basis point for Senior citizens Savings Scheme. Recommendations of the Committee have been referred to State Governments and concerned Ministries/ Departments of Central Government for their comments.

This information was given by the Minister of State for Finance Shri Namo Narain Meena in a written reply to a question raised in Rajya Sabha today.

DSM/SS/SL

PPF deposit limit increase raises annual cap and increases interest on advances, small-savings rates to be benchmarked to government yields. PPF rules are amended to raise the annual deposit ceiling and to increase the rate charged on advances against PPF deposits; concurrently, small savings interest rates are to be benchmarked to yields on comparable maturity government securities with prescribed positive spreads, with specified higher spreads for certain long term and senior citizen instruments.