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The government announced the interest rates for small saving schemes yesterday and surprising or should I say unsurprisingly, the interest rates of many schemes, especially the long-term ones like PPF and Sukanya Samriddhi are still too high! Why is the government not sticking to policy?

If you are surprised by the title in spite of the fact that rates have headed south this year, an explanation is provided below. But first, a look at the entire list of revised rates.

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The government has announced premature closure norms for PPF accounts. This includes a rather harsh retrospective penalty which is illustrated in this post.

The order was passed on 18th June 2016. Thanks to Basu(nivesh.com) for pointing this out.

When can a PPF account be closed prematurely?

In Feb. 2016, a circular said,

"Premature closure of PPF accounts shall be permitted in genuine cases, such as cases of serious ailment, higher education of children etc,. This shall be permitted with a penalty of 1% reduction in interest payable on the whole deposit and only for the accounts having completed five years from the date of opening."

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A provided fund for the general public came into being by an act of parliament in "in the nineteenth Year of the Republic of India" (1968) and has since evolved with the Indian economy. In this post, let us consider the way in which the interest rates of the public provident fund (PPF) has changed since inception. The PPF ACT 1968

The idea is to understand the factors (at least a couple of them) that affect the interest rate so that we can react to future rate changes with better perspective.

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The extension rules and options available for public provident fund accounts after maturity or after completion of 15 years are discussed. The national savings institute (NSI India) has a wonderful pdf rule booklet with all notifications and clarifications since inception, and this post is entirely based on that.

The aim here is to consolidate my understanding of the PPF extension rules after a question by Nihar Ranjan Pal at FB group Asan Ideas of Wealth yesterday.

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Seven public sector enterprises will be issuing tax-free bonds this financial year. Thankfully, the interest rates of these bond will be much lower than the last issue. Thankfully because that would serve as a natural deterrent.

If you are young and far away from retirement, invest your money productively instead of buying these bonds.  I had earlier written a more detailed post on this. Have a look if you need more convincing.

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