Govt to hike EPF interest rate to 8.8%

Govt. is all rate to hike the rate of interest on small saving instruments like the Public Provident Fund (PPF) starting April 1. Consequently, deposits to the PPF are expected to earn an interest of near 8.8 per cent as against the prevailing rate of 8.6 per cent. The interest rate on other small saving instruments like the National Savings Certificate and postal deposits are also expected to be hiked from April 1. The move comes after the Shyamala Gopinath committee on the National Small Savings Fund suggested that interest rates on small savings should be aligned to interest rates on government securities. The finance ministry had hiked the interest rate on deposits to the PPF to 8.6 per cent from December last year, as against the earlier rate of interest of 8 per cent. With the higher interest rate, small saving instruments like postal deposits and PPF are expected to become popular once again. Many investors had moved away to more attractive and equally risk averse avenues of investment like fixed deposits and EPF that provided higher returns.