Learn the Difference Between PPF vs. FD

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Learn the Difference Between PPF vs. FD

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:

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

FD Interest Rates of Private Sector Banks 2024

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. 

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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