The Modi government has marginally reduced the interest rate for General Provident Fund (GPF) and other related schemes for the second quarter of this fiscal. From 8 per cent in the past three quarters, the interest rate has now come down by 0.1 percentage point. GPF is provident fund account where only government employees are entitled to be a member. The government employees contribute a part of their salary and are entitled to the accumulated fund at the time of retirement.
"It is announced for general information that during the year 2019-2020, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 7.9% w.e.f. 1st July, 2019, to 30th September, 2019," the Ministry of Finance said in a notification.
The GPF rules are applicable to those central government employees who have been appointed on or before December 31, 2003. The employees can also nominate someone at the time of opening their account. The lower interest rate will be applicable on provident funds of central government employees, railways and defence forces.
Other funds eligible for the benefit include the Contributory Provident Fund (India), the All India Services Provident Fund, the State Railway Provident Fund, the General Provident Fund (Defence Services), the Indian Ordnance Department Provident Fund, the Indian Ordnance Factories Workmen's Provident Fund, the Indian Naval Dockyard Workmen's Provident Fund, the Defence Services Officers Provident Fund, and the Armed Forces Personnel Provident Fund.
The last time the government tinkered with the GPF interest rate was in October, when it had announced a 0.4 per cent hike to 8 per cent. The latest revision follows last month's cut in the interest rate on small savings schemes, including Public Provident Fund (PPF) and National Savings Certificate (NSC), by 0.1 per cent for the July-September quarter. NSC and PPF now fetch annual interest rate of 7.9 per cent, while Kisan Vikas Patra (KVP) yields 7.6 per cent with maturity of 113 months.
In March 2017, the government relaxed the norms for withdrawal of GPF, which will allow subscribers to receive payments within 15 days. As per the new rule, employees can also withdraw the fund for select purposes after completing 10 years of service, as against 15 years of service earlier.