Tuesday, 6 September 2016

Brace for fall in EPF, PPF rates on govt bond yields


The yields from government bonds to which these rates are linked have fallen 60-70 bps since the last rate cut in March. Currently, the EPF rate is 8.8 per cent, which is unlikely to be maintained this year, reports The Economic Times. A basis point is 1/100th of a percentage point.
Small savings rates and interest rates on retirement savings are likely to be reduced in the near future on a steep fall in the yields on government bonds during the past six months.
The yields from government bonds to which these rates are linked have fallen 60-70 bps since the last rate cut in March. Currently, the EPF rate is 8.8 per cent, which is unlikely to be maintained this year, reports The Economic Times. A basis point is 1/100th of a percentage point.
According to a survey by the financial daily, 84% of the 25 finance professionals expect EPF rates to be lower this year. Also, 64 per cent said that a cut in interest rates of small savings schemes looks imminent. Currently, the interest rate on PPF is fixed at 8.1 per cent in Company incorporation in gurgaon
The EPFO invests 95 per cent of the funds in government bonds and rest in exchange traded funds to maximise returns.

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