What changed
The annual deposit ceiling under the Public Provident Fund Scheme, 1968 was raised from ₹70,000 to ₹1,00,000. The interest rate on loans against PPF was increased from 1% per annum to 2% per annum. Additionally, the interest rate on PPF subscriptions and balances was fixed at 8.6% per annum for deposits made on or after December 1, 2011.
What it means for you
Banks operating PPF accounts must update their systems and forms to reflect the new deposit limit of ₹1,00,000 and the revised loan interest rate of 2% per annum. The higher deposit cap may encourage more savings under PPF, potentially increasing account activity and balances. Lenders need to ensure accurate interest calculation and disclosure to subscribers.
What you must do
- Update PPF account opening forms and system limits to reflect the new maximum annual deposit of ₹1,00,000.
- Adjust loan interest rate calculations from 1% to 2% per annum for all PPF loans disbursed on or after December 1, 2011.
- Display the amended scheme details on branch notice boards and inform all operating branches.
- Train staff on the revised deposit limit and loan interest rate to ensure correct customer guidance.
Who it affects
All scheduled commercial banks operating PPF accounts (including SBI, associate banks, nationalized banks, IDBI Bank, ICICI Bank), PPF subscribers and account holders, Bank branches handling PPF transactions
When did the PPF amendments take effect?
The amendments came into force on December 1, 2011, as per the Government notifications dated November 25, 2011.
What is the new interest rate on PPF loans?
The interest rate on loans against PPF has been increased from 1% per annum to 2% per annum, effective December 1, 2011.
Does the 8.6% interest rate apply to existing PPF balances?
Yes, the 8.6% per annum interest rate applies to subscriptions made on or after December 1, 2011, and to balances at the credit of the subscriber as of that date.