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Interest rates on popular small savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY) could be revised soon. The Finance Ministry is expected to review the interest rates of all small savings schemes on December 31, 2025. If any changes are announced, the new rates will apply for the January–March 2026 quarter.

Small savings schemes are widely preferred by Indian investors because they are considered among the safest investment options, backed directly by the Government of India. Any change in interest rates can therefore impact the returns of millions of investors across the country.

Sukanya Samriddhi and SCSS Offer the Highest Returns Currently

At present, the highest interest rate of 8.2% is offered by two schemes:

• Sukanya Samriddhi Yojana (SSY)

• Senior Citizens Savings Scheme (SCSS)

These schemes are especially popular among long-term and conservative investors. SSY is designed to encourage savings for a girl child’s future, while SCSS caters specifically to senior citizens seeking stable and regular income after retirement.

On the other hand, the Public Provident Fund (PPF)—one of the most widely used long-term savings instruments—currently offers an interest rate of 7.1%.

RBI Repo Rate Cuts vs Small Savings Interest Rates

Despite multiple repo rate cuts by the Reserve Bank of India (RBI) in 2025, interest rates on small savings schemes have remained unchanged so far. Over the year, the RBI has reduced the repo rate by 1.25%, prompting banks to lower interest rates on fixed deposits.

However, for the October–December 2025 quarter, the government decided to keep small savings scheme rates stable. As a result:

• NSC interest rate stands at 7.7%

• Post Office Monthly Income Scheme (POMIS) offers 7.4%

• Kisan Vikas Patra (KVP) provides 7.5%

This divergence between bank deposit rates and small savings returns has made government-backed schemes even more attractive for risk-averse investors.

Government Reviews Rates Every Quarter

According to financial experts, the possibility of a rate revision remains open. Viraal Bhatt, Founder of Money Mantra, explained that the Finance Ministry, in coordination with the RBI, reviews small savings interest rates every quarter.

The decision is usually based on:

• Inflation trends

• Government bond yields

• Overall market interest rate environment

In recent years, small savings rates have seen both increases and reductions depending on macroeconomic conditions and benchmark yields.

Why Investors Trust Small Savings Schemes

Small savings schemes follow a formula largely linked to market yields. The RBI provides the government with updated yield curve data, which helps determine appropriate interest rates.

Despite the potential for rate adjustments, investor confidence in these schemes remains strong. The key reason is government backing, which ensures capital protection and eliminates the risk of default.

Among all options, PPF continues to be the most popular small savings scheme, especially for long-term wealth creation.

PPF: A Cornerstone of Long-Term Financial Planning

Experts consistently recommend including PPF in a balanced financial plan. The scheme has a 15-year maturity period, making it ideal for disciplined, long-term investing.

With regular annual contributions, investors can build a substantial corpus over time. PPF also enjoys tax benefits under prevailing income tax laws, further enhancing its appeal.

Because small savings schemes are supported by the government, investors do not have to worry about market volatility or capital loss—making them a preferred choice for conservative and long-term savers.

Bottom Line

As the Finance Ministry prepares to review small savings interest rates at the end of December 2025, investors should stay alert. Any revision could impact returns in the coming quarter. While rates may change in line with market conditions, the safety, stability, and government backing of schemes like PPF, NSC, SSY, and SCSS continue to make them a trusted investment option for millions of Indians.