Public Provident Fund (PPF) Interest Rate for October-December 2025 Announced

The Finance Ministry has announced the Public Provident Fund (PPF) account interest rate for the October to December 2025 quarter of the financial year 2025-26. According to the latest update, the PPF interest rate will remain unchanged at 7.1%, compounded annually. This announcement was made on September 30, 2025, and confirms that there will be no revision in the interest rates for this small savings scheme.

PPF Interest Rate Remains Unchanged

The Public Provident Fund is one of the most popular long-term savings schemes in India, offering assured returns and tax benefits. For the October-December 2025 quarter, the Government has once again chosen to keep the PPF interest rate steady at 7.1%.

This means that there has been no change in the interest rate for the last several years. The rate has remained at 7.1% since April 1, 2020, when it was revised downward from 7.9%. Before that, the PPF offered 7.9% between July 1, 2019, and March 31, 2020, and 8% between October 1, 2018, and June 30, 2019.

For the July-September 2025 quarter as well, the PPF rate was kept unchanged. The current decision reinforces the government’s approach to maintaining stability in small savings interest rates, even when market indicators suggest a possible change.

Eligibility to Open a PPF Account

The Public Provident Fund is a scheme designed to encourage individuals to save for the long term while enjoying guaranteed returns. The account can be opened by a single adult resident Indian. Additionally, a guardian can open an account on behalf of a minor or on behalf of a person of unsound mind.

However, rules permit only one PPF account per individual across India, whether it is opened in a bank or in a post office. Multiple accounts are not allowed.

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Investment and Maturity

The PPF scheme allows individuals to invest up to ₹1.5 lakh per year. The account matures after 15 years, making it a long-term investment option. On maturity, the investor can either withdraw the full amount or extend the account in blocks of five years.

The interest rate of 7.1% is compounded annually, meaning that the returns grow steadily over time. This feature, along with the safety of government backing, makes the PPF one of the most attractive fixed-income investments.

PPF as a Safe Investment

The PPF has retained its popularity, especially at a time when bank deposit rates have been falling. Amid declining fixed deposit rates, PPF stands out as a scheme that guarantees returns over a long period and also provides tax benefits under Section 80C of the Income Tax Act.

For risk-averse investors, the PPF continues to serve as a safe and reliable way to grow savings. Its guaranteed return of 7.1% is higher than the current yield formula would suggest, making it particularly favorable compared to other debt instruments.

How is the PPF Interest Rate decided?

The PPF interest rate is not decided arbitrarily but is based on a formula recommended by the Shyamala Gopinath Committee. According to this formula, the rate is linked to the average secondary market yield on 10-year government securities (G-Secs) of the previous quarter, with an additional spread of 25 basis points.

During the July-September 2025 quarter, the average yield on 10-year G-Secs ranged between 6.32% and 6.54%. Based on this formula, the PPF interest rate should have been between 6.57% and 6.79%. However, the government decided to continue offering a higher return of 7.1%, which is above the formula-based outcome.

Government’s Approach to Interest Rates

The government does not strictly adhere to the formula every quarter. In the past as well, the Finance Ministry has kept the interest rate for small savings schemes unchanged, even when the formula indicated a cut. This shows a preference for stability in household savings instruments over strict adherence to market yields.

The unchanged PPF rate suggests that the government is prioritizing investor confidence and ensuring that savers continue to receive attractive returns, despite fluctuations in bond market yields.

Historical Perspective on PPF Rates

The PPF has historically offered interest rates ranging between 8% and 8.8% for many years. However, over the last decade, there has been a gradual decline in rates in line with broader economic conditions and falling government bond yields.

In recent years:

• Between October 2018 and June 2019, PPF offered 8%.

• Between July 2019 and March 2020, the rate was reduced to 7.9%.

• Since April 2020, the rate has remained steady at 7.1%.

This means the rate has been unchanged for more than five years, providing predictability and stability for investors.

Outlook for PPF Investors

For PPF account holders, the continuation of the 7.1% interest rate offers clarity and assurance. Despite expectations of a revision in the October-December 2025 quarter, the Finance Ministry has opted for continuity. This ensures that investors can continue to plan their long-term finances without uncertainty over immediate interest rate changes.

The government’s decision also reflects the importance of small savings schemes in mobilizing household savings. By keeping rates unchanged, the Finance Ministry has maintained the attractiveness of the PPF relative to other savings options.

Conclusion

The announcement of the PPF interest rate for October-December 2025 confirms that the rate will remain at 7.1%, unchanged since April 1, 2020. Despite expectations of a possible change, the Finance Ministry has chosen stability over adjustment, ensuring that savers continue to benefit from a relatively higher rate compared to formula-based outcomes.

The PPF remains one of the most secure and rewarding savings instruments, offering guaranteed returns, tax benefits, and long-term compounding. With eligibility restricted to resident individuals and annual investments capped at ₹1.5 lakh, it continues to be a cornerstone of household savings in India.

As of now, investors can be assured that their PPF savings will continue to earn 7.1% compounded annually, making it a reliable avenue for long-term financial planning.

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