Interest rate on small savings schemes retained for Oct-Dec quarter

Public Provident Fund will continue to earn 7.1% interest; National Savings Certificate will fetch 7.7%

The government has retained the interest rates on Public Provident Fund (PPF), National Savings Certificate (NSC) and other small savings schemes for the October-December quarter of FY26. Its decision came a day before the Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged.

 

According to a Finance Ministry notification issued on September 30, current annual rates will continue till December 31. This means:

 

• PPF will continue to earn 7.1 per cent 
• NSC will fetch 7.7 per cent 
• Senior Citizen Savings Scheme stays at 8.2 per cent 
• Sukanya Samriddhi Yojana (SSY) remains at 8.2 per cent

• Monthly Income Account continues at 7.4 per cent 
• Kisan Vikas Patra earns 7.5 per cent interest, with maturity in 115 months 
• The simple savings deposit rate has also been retained at 4 per cent.

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How rates are usually set

 

The Shyamala Gopinath Committee, which was set up by the RBI in 2010, had recommended that small savings rates be fixed 25-100 basis points above the yields of government securities (G-secs) of similar maturity. In recent months, G-sec yields have softened from 6.77 per cent in January to 6.56 per cent in late September. If applied strictly, this should have led to lower rates.

 

But the government has often deviated from the committee’s recommendation due to political and economic sensitivities.

 

Last rate revision

 

The last revision took place in January-March 2024, when the SSY and three-year time deposits were marginally increased. Since then, interest rates have remained frozen for six consecutive quarters.

 

For now, small savers can breathe easy, their returns remain intact despite falling rates elsewhere. But given the link to bond yields, the possibility of a rate adjustment in future quarters cannot be ruled out.