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Which One To Choose? FD Or PPF?

Published On Nov 17, 2021 10:00 AM By InsuranceDekho

Public Provident Fund (PPF) is a savings scheme offered by the Post office and initiated by the National Savings Institute, it is a government backed scheme and  thus means safe and guaranteed returns . The interest rate is over 7% and the minimum amount to invest is as low as 500 which can be deposited as a numeration of monthly instalments.

Whereas, a fixed deposit is a facility offered by all banks , post offices and other financial institutions where the investor gets a higher interest rate than your regular savings account . The deposit amount and interest rate are fixed throughout the investing term thus it is also called a term deposit. Fixed deposits offer an interest rate of 8-9%  and yield higher benefits upon maturity.

Difference Between Public Provident Fund (PPF) and Fixed Deposit (FD)

The key differences between A Fixed Deposit and A Public Provident Fund are:

1. Presiding Authority 

Public Provident funds are backed by the government and are facilitated through the Indian Post Office  whereas the Fixed deposits are provided by all banks and other financial institutions.

2. Eligible Candidates 

For PPF only Indian  residents can apply to invest and avail the benefits of a PPF fund whereas for a Fixed deposit all residents of the nation, trusts, corporations and even non resident Indians can avail the benefits by investing and saving with a Fixed Deposit.

3. Joint Account Service 

 PPF does not offer a joint account service as the fund can only be started by a sole operator; each individual is required to get their own account started for depositing funds whereas in a Fixed deposit scheme one can avail joint account service and there can be multiple beneficiaries for this saving scheme.

4. Investment Tenure 

 In PPF funds there exists a lock in period during which redemption is restricted , the duration of this lock in period is 15 years ,investment tenure can be increased 5 year blocks whereas in Fd the investment tenure can be anywhere from 7 days to 20 years investors can redeem their money at any time but would have to incur the loss of interest .

5. Premature Withdrawals 

 In PPF funds investors have to hold out their money for at least 7 years , only from the 7th financial year of their investment tenure can they apply for redemption of funds whereas in fixed deposit schemes investors can withdraw their deposited funds anytime they desire to do so.

6. Changes In Interest

 PPF funds have their interests according to what is announced by the government every quarter whereas in Fixed Deposit scheme the interest rate is fixed from the get go and there are no such fluctuations in interest rate.

7. Tax Benefits 

In PPF the interest returns are fully exempted from income tax whilst deposits qualify for tax deductions whereas in Fixed Deposits tax exemption on interest returns is only up to one and a half lakh rupees

8. Loans Against The Deposits 

In PPF funds loans can be taken out against the deposit only after the 3rd financial year of the investment tenure whereas in Fixed deposit loans can be taken out any time as and when required by the investor.


Investing in a PPF or in an Fixed deposit are a great way to save your earnings for a future plan of execution, investing in these saving schemes offers you a safety net that you can fall on in times of need. PPF are backed by the government are more secure for a long-term saving plan and are more rigid in their benefits giving approach whereas fixed deposits offer more of a flexible approach towards the benefits or facilities provided under it. One should choose wisely as to where they want to invest their money as according to their need and the returns required.

Also read - How Will Investing In PPF Benefit Me?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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