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PPF Interest Rate History (2026 Update) 39+ Years History

Dev Ashish

Updated: January 2026

Currently, PPF rates are 7.1% (for the January-March 2026 quarter). The rates were last changed on 1st April 2020 onwards.

The history of PPF interest rates is not very exciting. The changes have been very rare till recently (before the government decided to go in for quarterly revisions of PPF rates).

But in spite of all the noise about other assets, Provident Funds remain the preferred mode of investment for most Indians.

PPF (Public Provident Fund) continues to be looked at as a solid product that creates a large corpus over time, with the added benefit of tax savings. As of now, PPF falls under the Exempt-Exempt-Exempt (EEE) tax regime. This means that:

However, this EEE taxation treatment of PPF might change in the near future. We will discuss that later in the post.

As of now, the rate of interest on PPF is 7.1% per annum. Read about whether investing in PPF after rate cuts few years back makes sense or not.

PPF Interest Rate History (Last 39+ years)

This history of PPF interest rates in the last 34 years has been as follows:

Or, graphically speaking:

As evident from the graph above, the change in rates has been rare:

Now, the quarterly revision of rates is allowed.

The PPF interest calculation continues to be done on a monthly basis – on the lowest balance between the 5th day and the end of the month. But the interest is credited only at the end of the year. So, as far as compounding is concerned, it takes place on an annual basis.

By the way, a little too much importance is given to investing in PPF before the 5th of the month instead of after the 5th. If you read in detail how interest on PPF account balance is calculated, you will realize that it hardly matters… so relax. Just do what you can do. Don’t worry too much about investing in PPF Before 5th Vs After 5th in every Month. On a related note, if you need to invest Rs 1.5 lakh in PPF in a lump sum and have the money available with you, then the best time to do so is to invest Rs 1.5 lakh in PPF before 5th April every year to maximize your PPF interest benefits.

How will PPF Interest Rates be changed now?

PPF is part of the government’s small savings schemes portfolio. So, the question of who decides the PPF interest rate has an obvious answer. 🙂

Earlier, the rates were considered for revision once every year.

But with effect from 1st April 2016, the rates for schemes like PPF, etc., are to be considered for revision every quarter, based on the previous quarter’s yield on benchmark government securities (or bonds of corresponding maturities) with a small markup (around 0.25%).

So if yields go down, the PPF rates should go down a few months after that. (and there will be a hue and cry about why the government is not investor-friendly)

If yields go up, the PPF rates should go up a few months after that (and people will cheer as they will benefit from a turnaround in the rate cycle).

But why is it that the government decided to switch from an annual to a quarterly revision of rates? Is the government worried about something? Why is it that it wants to bring the rates as close to that of benchmark government securities?

The answer is, and I quote from this article:

…according to a report in 2011 by Shyamala Gopinath committee (which was set up to review National Small Savings Fund, or NSSF), such a fixed rate regime caused a lot of volatility in collections.

When market rates declined, small savings collections went up as their rates remained unchanged. The opposite happened when market rates went up. This leads to a situation where when market rates are low, states are loaded with high-cost NSSF loans, and when market rates are high, NSSF loans as a source of financing fixed deposits dries up completely. It is therefore, very essential to align these rates with market rates.

In December 2011, acting on the recommendations of the report, the government made returns on small savings schemes market-linked. Rates on these products were benchmarked to government securities (G-secs) of similar maturity periods with a positive spread of 25 basis points.

Now, interestingly, banks are affected by changes in the interest rates of these small savings products.

Why?

Because the banks’ own savings products compete with the government’s small savings products.

So, having a positive markup on PPF, etc., made these products more suitable for customers looking for higher rates and, in turn, put a lot of pressure on the banks. So banks have a good reason to push for the reduction in rates offered by government products. This is the reason why banks have been lobbying (for years) to get this done. They cannot reduce rates on deposits, as that would mean losing out to competition from schemes like PPF (and other short-duration government products)

The New Risk?

Earlier, rates were revised once every year. But now, the revision will take place every quarter.

So there is obviously an increase in interest rate risk as far as PPF is concerned. So, in a falling rate scenario and for someone with a large PPF balance, it can hurt a lot.

But when you compare the current rate with inflation numbers (around 5% to 6%), it still seems to be satisfactory. Isn’t it? After all, inflation of 6% and PPF with a tax-free rate of 7.8% will offer you a real rate of about 2% if not more. And that should work.

But we are missing one very important point – inflation rates published by the government and the RBI are not exactly equal to our own inflation. 😉

You spend on products that are facing higher price hikes. So your personal inflation might be 10% and not what the RBI tells you.

So it’s possible that even with about 7.1% given by PPF, you are not getting any real returns.

You might feel that if that is the case, why not go for products that are known to give higher average returns (ofcourse, with short-term volatility) like equity mutual funds and invest regularly via SIP.

But simply comparing returns of PPF Vs ELSS Funds is not correct. PPF is a part of your debt portfolio, and equity MFs that of the equity portion of your portfolio. Both parts have their own significance. I will come to this point in a bit…

Now there is another (future) risk in products like PPF.

Future of PPF?

No. I am not questioning the safety of PPF in the future. It is run by the Government of India and hence it is (default) risk-free and extremely safe to invest in – no doubt.

But what about other kinds of risks? What if in future, the PPF is taxed? It almost happened this year for EPF before it was rolled back. But EEE status turning into EET is possible (eventually). In 2021, the government decided to make EPF (Employee Provident Fund) partially taxable by taxing interest on EPF contributions above Rs 2.5 lakh per year. So you can never be sure if a similar fate might not be in store for PPF as well. Isn’t it?

Another risk can be that withdrawal might have certain riders. Say you can’t withdraw the full amount on maturity. Or something similar. After all, the government is getting this large amount of money every year at a relatively low cost (currently 7.1%). So the government will want to reduce this rate and ‘try’ to keep money from going out. That is common sense, and that is a future risk for young people like us.

So when you think that the PPF is risk-free, remember that primarily, it is the default risk that you are talking about. Other risks (known and unknown) still remain.

Now, don’t think that I am against PPF as a product. It is an awesome product! It should definitely be part of one’s portfolio. But…

PPF is good. But not enough.

I have long maintained that only the provident fund is insufficient for retirement. The previous generation’s automatic choice of investment was the Provident Fund (PPF/EPF/VPF).

Why?

What else do you want in this world? 😉

But let us, for a moment, think about one thing:

PPF account has a maturity period of 15 years. So it is ideally created for goals that are at least 15 years away.

Now, due to the risk-free nature of the product, the returns given by PPF would ideally be less than those given by riskier assets. Isn’t it?

Also, you and I understand that when investing for long-term goals, we can and should invest more in assets that give higher returns in spite of being volatile.

Why? Because average returns are higher when longer periods are considered.

So if we are investing for goals that are due in the long-term (i.e. 15 years), like say retirement, etc., shouldn’t we be investing in an asset that gives better returns?

I think we should. If not fully, then atleast a major chunk of our investments. Short-term volatility should not be an excuse for avoiding an asset which gives higher long-term returns.

PPF is a wonderful instrument. It gives me peace of mind as returns don’t fluctuate like stocks or equity MFs.

Use this Excel-based PPF calculator to see how much you can accumulate using PPF alone (or read this detailed article on How to save Rs 1 crore using PPF and become a PPF crorepati).

But if you and I are able to stomach some of these short-term fluctuations, then we should have a higher exposure to equity as it provides higher long-term returns – which is necessary to build a healthy corpus. And also because in the long run, equity has a better potential to beat inflation and create wealth.

Remember that PPF is just one of the many instruments available for investments. Ideally, you should figure out your financial goals and then follow a properly designed financial plan to achieve your goals with certainty.

To get yourself a well-thought-through detailed goal-oriented financial plan, that tackles all goals like children’s education, retirement, house purchase, travelling, etc., you can consider a professional Stable Financial Planning Service. If you are interested, then head to this page for the smart Financial Planning Service. You will increase the probability of achieving your goals on time without stress.

I know that when the topic of PPF comes up, it also brings up the topic of tax savings. And with that, comes the PPF vs ELSS debate and questions like whether to invest in PPF or ELSS or both. But that is a detailed discussion in itself. So let’s leave it for some other day.

I personally invest a lot more in equity MFs and direct equities than in PPFs. So you can take that as a disclosure. 🙂

PPF (or EPF) should definitely be a part of your portfolio and you are right in regularly keeping track of PPF interest rates in 2025 in India. 🙂 But investments should be made as per the goal requirements, and the suitability of asset allocation and not just because of tax considerations.

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