Will small savings schemes interest rates change in 2026? Check current rates

The interest rates for the small savings schemes at the Post Office, like the Public Provident Fund (PPF), and National Savings Certificate (NSC), might see some changes as the Finance Ministry plans to review them on December 31, 2025. The new rates, which will be announced by December 31, 2025, will apply for the January-March 2026 quarter.

Currently, the post office offers its highest interest rates through the Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Account (SSA) at 8.2 percent. Meanwhile, the popular Public Provident Fund (PPF) scheme offers 7.1 percent.

• There has been a general decline in interest rates for FDs in banks following a 1.25 percent cut in the repo rate by the RBI in 2025.Small savings interest rates for October–December 2025 For the October–December 2025 quarter, the government has left interest rates on all small savings schemes unchanged.
• The Public Provident Fund (PPF) continues to offer 7.1 percent, making it a preferred long-term option for tax-efficient retirement savings.
• The Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY) remain the highest-yielding schemes in the basket, both carrying an interest rate of 8.2 percent.
• Among other options, the National Savings Certificate (NSC) offers a fixed return of 7.7 percent, while the Post Office Monthly Income Scheme (POMIS) provides a steady monthly payout at 7.4 percent.
• The Kisan Vikas Patra (KVP) continues to carry an interest rate of 7.5 percent, with investments doubling over a predetermined period.

Can the government slash the interest rates of small savings schemes?

“The government can cut the interest rates on small savings schemes. These rates are reviewed quarterly by the Finance Ministry in consultation with the Reserve Bank of India, and they are adjusted based on prevailing market conditions. Over the past few years, we’ve seen rates move up and down depending on inflation and benchmark yields,” said Viral Bhatt, Founder, Money Mantra (Personal finance investment solutions firm).

For investors, this means returns in schemes like PPF, NSC, and post-office FDs aren’t guaranteed to stay at current levels forever.

However, any change is usually announced in advance, and for products like PPF, the rate for the entire quarter remains fixed once declared.

How does the government decide the interest rate of the small savings scheme?

The interest rates on small savings schemes are set based on a formula that largely tracks market yields. The Finance Ministry looks at yields on government securities of similar maturities — for example, a 5-year G-Sec yield for a 5-year post-office term deposit. RBI provides inputs on current yield curves, and the ministry then finalises rates every quarter.

Should investors go for small savings schemes or FDs?

It depends on your goal and time frame; neither is universally better:

Choose small savings schemes (like PPF, NSC) if:

• You want safe, long-term savings with sovereign backing
• You are tax-conscious, PPF gives EEE (tax benefit upfront and at maturity)
• You have long investment horizons (PPF is great for horizon planning)

Choose bank/post-office FDs if:

• You want fixed tenure options (1–5 years) without long lock-ins
• You need liquidity and predictability — interest credited periodically
• You want to ladder your portfolio with different tenors

A practical approach: “Use a blend — PPF/NSC for core long-term safe bucket; FDs for tactical, short-to-medium needs. And remember small savings rates are reviewed quarterly, so factor potential rate moves into your decision. Relative attractiveness of each depends on where the interest rate cycle is,” Bhatt said.