RBI asks banks to pay 8.8 per cent on PPF deposits

The Reserve Bank of India (RBI) has directed banks to increase interest rates on public provident fund scheme, 1968 and the senior citizens savings scheme, 2004 for the current financial year.

Accordingly, the interest rate on public provident fund deposited with banks under `PPF, 1968' will go up to 8.8 per cent per annum effective 1 April 2012, from 8.6 per cent as of 1 December 2011.

The interest rate on 5-year senior citizens saving scheme (SCSS, 2004) has been raised to 9.3 per cent beginning 1 April 2012, from 9 per cent earlier, RBI said in a notification.

The move is in accordance with an earlier notification of 20 January regarding an increase in interest rates on the various small savings schemes, as per the government's decision.

RBI has also asked banks to display the new rates for the two small saving schemes on their notice boards for the information of subscribers.

The government had earlier raised annual investment ceiling in PPF savings to Rs1 lakh from Rs70,000.