The highest rate of interest that Employee Provident Fund (EPF) and Public Provident Fund (PPF) have ever provided was 12%. PPF hit the height between 1 April 1986 and 14 January 2000; EPF provided 12% price beginning FY1990, till FY2001.
The PPF scheme got here into existence in 1968. In the preliminary two years, the scheme provided simply 4.8% price of curiosity. From there, rates of interest progressively rose till they peaked at 12%. From FY201, charges began taking place once more. The 7.1% rate of interest that PPF presently gives is the bottom in about 44 years.
The authorities launched EPF scheme in 1952. In the preliminary three years, it provided a 3% price of curiosity. EPF charges rose progressively to 12% in FY1990.
Historically, rates of interest on each schemes had been all the time shut to one another. Things modified when the federal government selected a quarterly assessment of rates of interest on small financial savings schemes, which embrace PPF.
The rate of interest on PPF fell to eight% in 2016, to 7.8% in 2017, and to 7.6% in 2018. It rose once more in 2019, adopted by a steep lower of 80 foundation factors in April 2020.
EPF rates of interest, alternatively, remained above 8.5% all by way of these years. For the FY21, EPF might supply 8.5% price of curiosity, in line with stories.
The finance ministry decides the rate of interest on small financial savings schemes, together with PPF. The resolution on EPF rates of interest follows one other course of.
There is a central board of trustees with the Employees’ Provident Fund Organization (EPFO), together with the labour minister. They meet and ratify the rate of interest and ask the finance ministry for approval. Only after the finance ministry’s nod, the charges are notified.
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