PPF, Sukanya Samriddhi, NSC... Those investing in small savings schemes will face a big shock..

Those investing in small savings schemes may be in for a shock. Interest rates on post office small savings schemes, including schemes like the Public Provident Fund (PPF) and National Savings Certificate (NSC), may be reduced in the next quarter. The Finance Ministry is scheduled to review the interest rates on these schemes tomorrow, September 30th. Following this review, new interest rates will be announced. These new rates will be applicable for the quarter from October to December 2025.

The repo rate has been revised several times this year. The RBI has reduced the repo rate several times. Despite this, the government has not yet reduced the interest rates on small savings schemes, including schemes like the Sukanya Samriddhi Account (SSA) and the Senior Citizens Savings Scheme (SCSS). Interest rates on these schemes have remained stable. However, there are now fears that the Finance Ministry may reduce these rates in the upcoming quarterly review. This would be a major decision that would impact millions of investors. This move by the government could impact the income of many people.

Repo Rate Reduction
A major reason for the decline in interest rates is the RBI's repo rate reduction. The central bank has significantly reduced the repo rate this year. At the beginning of the year, the repo rate was 6.50%. This is the rate at which banks borrow money from the RBI. When this rate is low, money becomes cheaper for banks. The RBI reduced the repo rate by 25 basis points (bps) each in its monetary policy meetings in February and April. Subsequently, in the review meeting held in June, the RBI reduced the repo rate by another 50 bps.

Thus, the repo rate has been reduced by 1% overall this year. Following this significant repo rate reduction, many banks have also reduced the interest rates on their fixed deposit (FD) schemes. Banks have also discontinued several special FD schemes that previously offered very good interest rates. In some cases, banks continued offering these specific FD schemes but reduced the interest rates. This indicates that market interest rates are falling.

Savings Deposit 4.0
1-Year Fixed Deposit 6.9
2-Year Fixed Deposit 7.0
3-Year Fixed Deposit 7.1
5-Year Fixed Deposit 7.5
5-Year Recurring Deposit 6.7
Senior Citizen Savings Scheme 8.2
Monthly Income Account Scheme 7.4
National Savings Certificate 7.7
Public Provident Fund Scheme 7.1
Kisan Vikas Patra 7.5 (matures in 115 months)
Sukanya Samriddhi Account 8.2

Bond Yield
The bond yield of government securities is also an important factor. G-Secs, or government securities, are loans taken from individuals or institutions, and the government pays interest on them. Bond yields indicate the return on a bond. According to available data, the 10-year G-Sec bond yield was 6.779% on January 1, 2025. However, it declined to 6.483% by September 24, 2025. This means that the bond's yield has declined over this period. Although the yield has shown a slight increase over the past three months, it is still 0.296 points below its January 1 level.

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