PPF Rates are likely to fall below 7%, to a 46-year low. With the consistent decline in bond yields, it is very much likely that the rates of small saving schemes are likely to be cut during the quarterly revision, due next week. If it happens, as very much likely, it is going to be the first time since 1974 that the PPF rate may fall below 7%.
How is PPF Rate Revised
PPF rate is linked to the 10-year government bond yield which is revised at the beginning of each quarter. For the current April-June quarter, the rate was 7.1% at the end of March, when the 10-year bond yield averaged 6.42% in January-March quarter.
As, the 10-year bond yield has till now averaged 6.07% which currently stands at 5.85%, a cut in the rate is very much likely, which will bring the rates to a 46 year low.