JK News Today
The lower interest rate on provident fund deposits comes in the wake of a general decline in interest rate across different financial savings instruments.
The lower interest rate on provident fund deposits comes in the wake of a general decline in interest rate across different financial savings instruments, including bank fixed deposits and small savings schemes. Analysts say that interest rates on fixed deposits are likely to fall further as the banks’ kitty swells after demonetisation.
Despite the lowering of interest rate on provident fund deposits, analysts say that it still remains an attractive investment avenue. Rakesh Bhargava, director at Taxmann, said, “Reduction in rate of interest is a setback for 4 crore employees, yet the rate of interest is still very attractive in comparison to rate of interest on bank fixed deposits, National Savings Certificates, government bonds, public provident funds, etc.”
If the provident fund body had retained 8.8 per cent rate of interest for the current fiscal year, it would have faced a deficit of Rs 383 crore. The provident fund body had earlier projected an income of Rs 39,084 crore for the current fiscal year.