Home / Money / Personal Finance /  My PPF account has matured. How to get regular income at higher rate vs bank FDs

The PPF accounts of myself (73 years) and my wife (67 years) have matured recently. We both were in private jobs. Hence no monthly pension is received. We have some interest income from Bank FDs. Please advise as to where we can safely invest this PPF maturity proceeds so that we can get monthly / quarterly interest at better rates compared to bank FD rates which are maximum 6% as of now without any risk to the capital.

It has really become very difficult for senior citizens to survive in low interest rate era specially when they do not have any avenue to supplement their interest income. In my opinion you have the following three options to invest your matured amount of PPF account giving your better returns and that too without any risk to the capital. 

First of all, you both can invest individually in Senior Citizen Saving Scheme (SCSS). Interest on SCSS is payable quarterly. Currently the rate of interest is 7.4% p.a. Though the interest rate for SCSS is announced every quarter by the government but the interest rate gets fixed for the whole tenure of 5 years at the rate applicable at the time of making the deposit. You can make one or more deposits under SCSS but at no point in time the aggregate of deposits in all the accounts opened under SCSS can exceed the threshold of fifteen lakh rupees. If you wish you can extend the tenure by two more years at the time of maturity.

Secondly in addition to 15 lakhs each in SCSS, you both can additionally invest Rs. 15 lakhs individually in Pradhan Mantri Vay Vandana Yojna (PMVVY). This is an annuity scheme with return of premium. This scheme is managed by Life Insurance Corporation of India for government. Presently in PMVVY also you get 7.4% of return p.a. for ten years of its tenure. You have option to go for monthly, quarterly, half yearly and yearly payment options and the effective yield will change accordingly.

The balance amount you can invest in Floating Rate Saving Bonds of Reserve Bank of India. The rate of interest payable on these bonds unlike SCSS and PMVVY is floating and gets changed every six months. The interest payable on these bonds is benchmarked against interest payable on National Saving Certificate and is higher by 0.35%. Presently the rate of interest payable on these bonds is 7.15% p.a. Interest on these bonds is paid on 1st July and 1st January every year. These bonds have a tenure of seven years. One can invest any amount under these bonds without there being any upper monetary limit.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter


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