PPF, NSC, Sukanya Samriddhi Yojana Interest Rates May Be Cut; Decision Expected on September 30

Small Savings Scheme Interest Rate October–December 2025: Investors in popular government-backed small savings schemes such as the Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSA), and Senior Citizen Savings Scheme (SCSS) should brace for possible changes in interest rates. The Ministry of Finance will review and announce the latest rates for the October–December quarter today, September 30, 2025.

Market experts believe there is a strong possibility of a rate cut this time, primarily due to falling bond yields and recent policy moves by the Reserve Bank of India (RBI).

Why Interest Rates May Be Reduced

This year, the RBI has already cut the repo rate three times — 25 basis points each in February and April, followed by a 50 basis point cut in June. Overall, policy rates have dropped by 1% in 2025. Whenever repo rates fall, banks reduce interest on fixed deposits and other deposit schemes. Some banks have even withdrawn their high-interest special deposit schemes.

Adding to this trend, government securities (G-Sec) yields — the benchmark for small savings rates — have also declined. On January 1, 2025, the yield on the 10-year G-Sec was 6.779%, but by September 24, it had dropped to 6.483%.

According to the recommendations of the Shyamala Gopinath Committee, small savings rates should be aligned with G-Sec yields. For instance, the interest on PPF is supposed to be 25 basis points higher than the 10-year G-Sec yield. Based on the June–September average, the PPF rate should work out to 6.66%, while the government currently offers 7.1%. This suggests that the Finance Ministry may consider lowering the rates.

When Were Rates Last Changed?

Small savings scheme rates were last revised in January–March 2024. At that time:

• The 3-year time deposit rate was increased from 7% to 7.1%.

• Sukanya Samriddhi Yojana’s rate was raised from 8% to 8.2%.

• Other schemes’ rates remained unchanged.

Since then, rates have been stable, even as G-Sec yields fluctuated.

Current Small Savings Scheme Interest Rates (July–September 2025)

• Savings Deposit: 4%

• 1-Year Time Deposit: 6.9%

• 2-Year Time Deposit: 7%

• 3-Year Time Deposit: 7.1%

• 5-Year Time Deposit: 7.5%

• 5-Year Recurring Deposit (RD): 6.7%

• Senior Citizen Savings Scheme (SCSS): 8.2%

• Monthly Income Scheme (MIS): 7.4%

• National Savings Certificate (NSC): 7.7%

• Public Provident Fund (PPF): 7.1%

• Kisan Vikas Patra (KVP): 7.5% (Maturity in 115 months)

• Sukanya Samriddhi Yojana (SSA): 8.2%

Impact on Investors

Small savings schemes remain one of the most trusted investment avenues for middle-class households, pensioners, and senior citizens, given their guaranteed returns and sovereign backing. A rate cut, however, would directly affect the returns of millions of savers.

• Senior citizens depend heavily on SCSS and MIS for regular income.

• Parents investing in Sukanya Samriddhi Yojana for their daughters’ future may see lower compounding benefits if rates are cut.

• General investors using PPF or NSC for long-term savings and tax benefits will also face lower interest accruals.

While the government typically follows the formula linked to G-Sec yields, it does not always make changes strictly on that basis. Ahead of major festivals like Dussehra and Diwali, the Finance Ministry may weigh investor sentiment before announcing any cuts.

Key Takeaways

• Finance Ministry will announce October–December 2025 interest rates for PPF, NSC, SSA, SCSS, and other small savings schemes on September 30, 2025.

• Falling repo rates and lower G-Sec yields increase the likelihood of a rate cut.

• Current PPF rate is 7.1%, but formula-based calculation suggests it should be around 6.66%.

• Any reduction will directly affect millions of small savers, especially middle-class families and senior citizens.