The Government has hiked the interest rate for General Provident Fund (GPF) and other schemes, to eight per cent for the last quarter. This is good news for those who work for the Central Government, railways and defence forces.
This increase of 0.4 per cent comes just when Diwali is around the corner. In September, the Government had increased the interest on small savings, including NSC and PPF by 0.4 per cent for the October-December quarter. The aim was to align the interest rates with rising deposit rates in the bank.
Only government employees can be members of the General Provident Fund (GPF) account. A certain percentage of the salaries of these employees goes into this account, and they are allowed to use that accumulated fund when they retire. It is therefore a savings solution for government staff created with their own regular contributions. They earn interest on this amount.
Employees of private companies cannot become members of GPF. When their tenure is over with the government, or when they retire, they can withdraw the amount for their personal use. They also have the option to nominate someone who can use that amount in the event of their death.