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Provident Fund, National Savings Certificate, Kisan Vikas Patra: Meaning and current rate of interest

Hemant Singh

What is a Public Provident Fund?

PPF or Public Provident Fund is a government-supported savings scheme. It is open to everyone – unemployed, employed, self-employed or even retired. It is not mandatory and anyone can contribute any amount to the PPF subject to a minimum of Rs 500 and a maximum of Rs 1.5 lakh per year. 

It has a fixed return which is set by the government every quarter. You can open a PPF account with the post office or most major banks. The PPF interest rate is reviewed every quarter. The current PPF interest rate is 8%.

Recently the government has reduced the rate of interest on PPF by 8%. So the new PPF rate of 7.10% for April-June 2020 quarter.

PPF is different from EPF. EPF is mandatory in nature while PPF is optional. PF is the popular name for EPF or Employees’ Provident Fund.

The National Savings Certificate (NSC) Meaning:

The National Savings Certificate (NSC) is a fixed income investment scheme. This NSC initiative is launched to promote small saving habits in the general public. This is a lesser risk-oriented product that offers a fixed interest that is currently at 6.8% per annum for a 5 year period.

NSCs are available in 2 fixed maturity periods – 5 years and 10 years. There is no maximum limit on the purchase of NSCs, but only investments of up to Rs 1.5 lakh can entitle you a tax exemption under Section 80C of the Income Tax Act, 1961.

Kisan Vikas Patra (KVP):

Kisan Vikas Patra (KVP) as a small saving certificate scheme started by the India post in 1988. The prime objective of KVP is to encourage long-term financial discipline in general people. The minimum investment in KVP is Rs. 1000 and there is no upper limit.

The amounted invested in the KVP gets double in 124 months  Many people invest in these small saving schemes so that they can get tax exemption in the income tax that is why these schemes are popular among salaried people.

Another benefit is that one does not have to pay any tax even on withdrawal from PPF after maturity.

Interest rates that are applicable to select small savings schemes have been revised with effect from April 1, 2020. So the beholders of these schemes like (the Kisan Vikas Patra (KVP), 15-year Public Provident Fund (PPF), the National Savings Certificate (NSC) will receive 10% lesser interest.

Now let us have a look at the revised rate of return on these schemes;

Small Savings Scheme 

Interest rate from April 1, 2020

Interest Rate (July- September 2019

Savings Account 



Five-year recurring deposit (RD) account 



One-year time deposit account 



Two-year time deposit  account 



Three-year time deposit  account 



Five-year time deposit account 

6.7 %


5-year Senior Citizen Savings Scheme



5-year Monthly Income Account



15-year Public Provident Fund (PPF) 



5-year National savings certificate (NSC) 



Kisan Vikas Patra (KVP) 

(will mature in 124 months)


Sukanya Samriddhi 



(Source: Ministry of Finance website)

Impact of reduction in the rate of interest can be;

The reduction in the annual rate of return will discourage people to invest in these small saving schemes. So it may reduce the availability of funds for investment in the economy which may further reduce the overall development of the country.

Hence in the concluding, I would like to say that the government should act wisely(reduction will not save huge government money) while taking the decisions related to the poor and middle sections of the Indian economy. 


How to withdraw money from the provident fund without the consent of the employer?


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