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Public Provident Fund: Interest rate changed from 8.0% to 7.1% in 15 years. How would have ₹1 lakh/year grown?
4 min read | Updated on August 26, 2026, 19:36 IST
SUMMARY
The PPF interest rate has traveled a long way since 2010. It started at 8.00% for the financial year 2010-11, jumped to 8.80% from December 1, 2011, and remained at 8.70% for three consecutive years from 2013-14 to 2015-16.
From July 2019, the PPF rate fell to 7.90%, and from April 2020, it has been unchanged at 7.10%. | Image: Shutterstock
The PPF interest rate has traveled a long way during this period. It started at 8.00% for the financial year 2010-11, jumped to 8.80% from December 1, 2011, and remained at 8.70% for three consecutive years from 2013-14 to 2015-16, as per the Post Office website. The rate was revised quarterly from April 2016 onwards.
From April 2016, the rate dropped to 8.10% for the first two quarters before settling at 8.00% for the October 2016 to March 2017 period. In 2017-18, the rate moved from 7.90% to 7.80% and then to 7.60% by January 2018. It briefly recovered to 8.00% from October 2018 to June 2019, this was the last time PPF investors saw 8%.
According to the India Post website, the current interest rate of 7.1% per annum is compounded yearly and calculated for the calendar month on the lowest balance in the account between the close of the fifth day and the end of the month. This is why financial advisors recommend depositing the PPF contribution before the 5th of each month to maximise interest accrual.
How the corpus builds
Let us understand with an example, assuming an investor started investing ₹1 lakh per year in PPF from April 1, 2010.
In the first year, a deposit of ₹1 lakh earned ₹8,000 in interest at 8.00%, taking the balance to ₹1,08,000. By the end of the fifth year (FY 2014-15), the balance had grown to ₹6,44,910, with the interest component alone contributing ₹51,617 that year. By the end of the tenth year (FY 2019-20), the balance stood at ₹15,82,481, with interest of ₹1,16,203 earned in that single year exceeding the annual deposit itself. At this point, compounding truly took over. From the eleventh year onwards, the annual interest earned surpassed the annual investment. In FY 2023-24, the fourteenth year, the interest earned was ₹1,69,598 on a deposit of ₹1,00,000. In the final year, FY 2024-25, the interest was ₹1,88,739.
At maturity, which fell on March 31, 2025 (15 financial years from the year of account opening, as per PPF rules), the total balance would stand at approximately ₹28,47,036, against total contributions of ₹15,00,000. The interest earned = ₹13,47,036, or about 89.8% of the amount invested.
The following table summarises the above calculation:
| Financial Year | Interest Rate (%) | Deposit (₹) | Interest earned (₹) | Balance (₹) |
|---|---|---|---|---|
| 2010-11 | 8.00 | 1,00,000 | 8,000 | 1,08,000 |
| 2011-12 | 8.00 to 8.80 | 1,00,000 | 17,195 | 2,25,195 |
| 2012-13 | 8.80 | 1,00,000 | 28,617 | 3,53,812 |
| 2013-14 | 8.70 | 1,00,000 | 39,482 | 4,93,293 |
| 2014-15 | 8.70 | 1,00,000 | 51,617 | 6,44,910 |
| 2015-16 | 8.70 | 1,00,000 | 64,807 | 8,09,717 |
| 2016-17 | 8.10 to 8.00 | 1,00,000 | 73,232 | 9,82,949 |
| 2017-18 | 7.90 to 7.60 | 1,00,000 | 84,470 | 11,67,419 |
| 2018-19 | 7.60 to 8.00 | 1,00,000 | 98,859 | 13,66,278 |
| 2019-20 | 8.00 to 7.90 | 1,00,000 | 1,16,203 | 15,82,481 |
| 2020-21 | 7.10 | 1,00,000 | 1,19,456 | 18,01,937 |
| 2021-22 | 7.10 | 1,00,000 | 1,35,038 | 20,36,974 |
| 2022-23 | 7.10 | 1,00,000 | 1,51,725 | 22,88,699 |
| 2023-24 | 7.10 | 1,00,000 | 1,69,598 | 25,58,297 |
| 2024-25 | 7.10 | 1,00,000 | 1,88,739 | 28,47,036 |
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