Yesterday Govt have reduced the interest rates for small saving schemes by 0.1%.Since last year Govt have decided to have the rates dynamic & interest rates will reset for every year as per surrounding interest rate scenario.
Interest Rates are revised for different instruments like PPF,Postal Monthly Income Plan (MIP),Senior Citizen Saving Scheme (SCSS),National Saving Certificate.
New rates will applicable from April 01, 2013.
So its get clear that investment like PPF can not be totally risk free & carries interest rate risk..Interest rates of Bank deposits are fixed for the entire tenure but this is not case for PPF where interest rates will reset for each year & interest will be added for that year as per the rate.
Also View: Cumulative Flow Of Fixed Deposit & PPF After Paying Off The Taxes.
New Interest Rates:
| Instrument | Old Interest Rates | New Interest Rates |
| PPF | 8.8% | 8.7% |
| MIP | 8.5% | 8.4% |
| SCSS | 9.3% | 9.2% |
| NSC (05 Yrs) | 8.6% | 8.5% |
| NSC (10 Yrs) | 8.9% | 8.8% |
Though there is reduction in PPF interest rates in PPF,rates are still very much attractive as maturity or withdrawals are completely tax free.
