Learn the Difference Between PPF vs. FD

  • May 20, 2024
  • Dushyant Sharma
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Public Provident Fund (PPF) and Fixed Deposit (FD) are popular investment choices in India and almost every Indian investor has heard about them. However, many Indians do not have a complete understanding regarding these two investment schemes. 

 

To decide whether PPF is better than FD or vice versa, it is important to know the difference between them. This article will help you to learn the difference between PPF vs. FD.

What is Public Provident Fund (PPF)?

The Public Provident Fund (PPF) is a popular investment scheme that offers individuals a safe and reliable avenue to save funds for their future. PPF was first offered to the Indian public in 1968, by the Finance Ministry’s National Savings Institute. Since then, PPF continues to be a popular scheme which offers dual benefits of investment and savings.

 

It is a government-backed savings scheme, which encourages long-term savings and provides financial security. The minimum tenure of PPF is 15 years. If you wish, you can extend it in blocks of 5 years indefinitely.

PPF Interest Rate 

Current PPF Rate

At present, PPF interest rate is fixed at 7.1% (Q1 of FY 2024-25).

PPF Interest Rate History 

PPF interest rates are subject to change. Here is a table showing the PPF interest rate history:

 

Period

Interest Rate on PPF

January - March (2024)

7.1%

October - December (2023)

7.1%

July - September (2023)

7.1%

Apri - June (2023)

7.1%

January - March (2023)

7.1%

October - December (2022)

7.1%

July - September (2022)

7.1%

April - June (2022)

7.1%

January - March (2022)

7.1%

October - December (2021)

7.1%

July - September (2021)

7.1%

April - June (2021)

7.1%

January - March (2021)

7.1%

October - December (2020)

7.1%

July - September (2020)

7.1%

April - June (2020)

7.1%

January - March (2020)

7.9%

October-December (2019)

7.9%

July - September (2019)

7.9%

April - June (2019)

8%

January - March (2019)

8%

October - December 2018

8%

July - September 2018

7.6%

April - June 2018

7.6%

January - March 2018

7.6%

October - December 2017

7.8%

July - September 2017

7.8%

April - June 2017

7.9%

January - March 2017

8.0%

What is Fixed Deposit (FD)?

A Fixed Deposit (FD) is a financial instrument which is offered by Banks as well as NBFCs. In an FD, the investors deposit a lump sum amount for a fixed period of time and earn a higher interest rate as compared to savings accounts. FD was first introduced in the early 1900s by the British to encourage saving habits among Indians, according to AU Small Finance Bank.

 

FD’s tenure can range from a few weeks to several years. The interest rate provided by an FD remains the same regardless of the fluctuation in the market. Once an FD reaches its maturity, the investor becomes eligible for receiving the principal amount along with the accrued interest. FDs are a popular form of investment in India, especially for the conservative investors who seek a safe and stable return on their capital without the involvement of any market risks. 

 

Note: An NRI cannot open a PPF account in India but is permitted to open FD.

FD Interest Rates Across Various Indian Banks in 2024

Curious about the latest FD rates in 2024 for various banks in India? Check out the lists below.:

FD Interest Rates of Public Sector Banks 2024

Company

RoI up to 3 years

RoI up to 5 years

RoI for 10 years

Senior Citizen - RoI

Bank of Baroda (Callable)

7.25%

6.50%

6.50

Up to 50 bps extra

Bank of India

6.75%

6.50%

6%

Up to 50 bps extra

Bank of Maharashtra

6.50%

6.50%

6.50%

Up to 50 bps extra

Canara Bank (Callable)

6.85%

6.83%

6.70%

Up to 50 bps extra

Central Bank of India

7%

6.50%

6.25%

Up to 50 bps extra

Indian Overseas Bank

6.80%

6.50%

6.50%

Up to 50 bps extra

Punjab and Sind Bank

6.30%

6%

6.25%

Up to 50 bps extra

Punjab National Bank

7%

6.50%

6.50%

Up to 50 bps extra

State Bank of India

6.80% to 7%

6.50%

6.50%

Up to 50 bps extra

UCO Bank

6.30% to 6.50%

6.20%

6.10%

Up to 50 bps extra

FD Interest Rates of Private Sector Banks 2024

Company

RoI up to 3 years

RoI for 5 years

RoI for 10 years (%)

Senior Citizen - RoI

Axis Bank

7.10%

7.10%

7%

Up to 50 bps extra

Bandhan Bank

7.25%

7.25%

5.85%

Up to 50 bps extra

CSB Bank

5.75%

5.75%

6%

Up to 50 bps extra

City Union Bank

6.50%

6.25%

6.25%

Up to 25 bps extra

DCB Bank

7.60%

7.40%

7.25%

Up to 50 bps extra

Federal Bank

7.05%

7%

6.60%

Up to 50 bps extra

HDFC Bank

7%

7%

7%

Up to 50 bps extra

ICICI Bank

7%

7%

6.90%

Up to 50 bps extra

IDBI Bank

7%

6.50%

6.25%

Up to 50 bps extra

IDFC First Bank

7.25%

7%

7%

Up to 50 bps extra

Jammu and Kashmir Bank

7%

6.50%

6.50%

Up to 50 bps extra

IndusInd Bank (Callable)

7.25%

7.25%

7%

Up to 50 bps extra

Karnataka Bank

6.50%

5.80%

5.80%

Up to 40 bps extra

Karur Vysya Bank

7%

7%

6.25%

Up to 40 bps extra

Kotak Mahindra Bank

7.50%

7.10%

7%

Up to 50 bps extra

RBL Bank

7.50%

7.10%

7%

Up to 50 bps extra

South Indian Bank

6.70%

6.70%

6%

Up to 50 bps extra

Tamilnad Mercantile Bank

6.75%

6.50%

6.50%

Up to 50 bps extra

Source: Forbes India

What’s the difference between PPF and FD?

Now that we’ve discussed what PPF and FD are, it’s time to learn the difference between them using the table below. 

Feature

Fixed Deposit

Public Provident Fund

Type of Investment

Can be short term (7 days - 3 months) or long term (5 - 10 years).

Long term i.e., 15 years.

Tax Benefits

Tax deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

Tax deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

Risk Level

Low

Low

Returns Offered 

Fixed returns which are higher than the interest rates offered by savings accounts.

Market-linked returns which can be higher/lower than FDs.

Liquidity

Withdrawals before maturity may attract penalty

Withdrawals before retirement may be restricted or may attract penalty

Eligibility

Available to all individuals and organizations.

Available to salaried employees and certain organizations. NRIs are not eligible.

Conclusion

Both PPF and FD continue to be the most common and safest investment options available in India. The returns offered by FDs remain fixed while the returns offered by PPFs are market-linked and can be lower or higher than FDs depending on the market’s condition. Both these schemes have tax benefits under Section 80C of the Income Tax Act. You can choose to open a PPF or FD depending on your financial condition and risk appetite among other factors.

 

Disclaimer: This blog is for educational purposes only. The interest rates mentioned in this article are subject to change, and we do not guarantee the accuracy of these interest rates in the future. We do not recommend making any investment decisions based on this article.


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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