The government has kept interest rates on General Provident Fund (GPF) and other similar funds for the quarter ended March 2020 unchanged at 7.9%.
The department of economic affairs, which comes under the finance ministry, has notified that the fund accumulation at the credit for subscribers of GPF and other similar funds will fetch an interest rate of 7.9% for the March quarter.
GPF is a type of provident fund account that is available only for government employees in India. It allows all government employees to contribute a certain percentage of their salary towards the General Provident Fund and the total amount accumulated throughout the employment term is paid to the employee at the time of retirement.
The interest rate of 7.9% for the period January to March 2020, effective 1 January, will apply to all the following funds: General Provident Fund (Central Services), Contributory Provident Fund (India), All India Services Provident Fund, State Railway Provident Fund, General Provident Fund (Defence Services), Indian Ordnance Department Provident Fund, Indian Ordnance Factories Workmen’s Provident Fund, Indian Naval Dockyard Workmen’s Provident Fund, Defence Services Officers Provident Fund and Armed Forces Personnel Provident Fund.
The GPF interest rates for the previous two quarters -- September-December 2019 quarter and July-September quarter 2019 -- stood at 7.9%. Before that, the rate stood at 8% for the April to June 2019 quarter
The government had earlier kept interest rates for small saving schemes such as Public Provident Fund (PPF) and National Savings Certificate (NSC), etc, unchanged for the March quarter. Usually, the government revises the interest rate on small savings schemes at the start of each quarter of the financial year and subsequently declares the rate on GPF and other schemes.
Keeping rates on GPF and other small savings schemes unchanged was significant as the move came at a time of growing calls for a rate cut in such schemes to bring them at par with fixed deposits at banks. Currently, the interest rate on PPF is 7.9% per annum compounded annually, while banks are offering anywhere between 4% and 8% depending on the amount and tenure of deposits.