Small Saving Scheme: Government's Big Decision on Small Savings Scheme Interest Rates – Know the Rates for PPF to Sukanya Samriddhi

Small Saving Scheme Interest Rate Update:
In response to multiple repo rate cuts, banks have reduced interest rates on Fixed Deposits (FDs). This led to speculation that the government might also reduce interest rates on small savings schemes. However, the government has decided to keep interest rates unchanged for these schemes for the second quarter (Q2) of FY 2025-26. The rates are reviewed quarterly.

No Change in Interest Rates for Q2 FY 2025-26

In an official notification, the Ministry of Finance stated that the interest rates applicable from July 1, 2025 to September 30, 2025 will remain unchanged from the rates announced for the previous quarter (April 1 to June 30, 2025).

Interest Rates for Key Schemes

• Sukanya Samriddhi Yojana (SSY):
  Interest rate remains at 8.2% per annum

• Three-Year Fixed Deposit:
  Continues to offer 7.1% interest

• Public Provident Fund (PPF):
  Rate remains unchanged at 7.1%

• Post Office Savings Account:
  Interest rate maintained at 4%

• Kisan Vikas Patra (KVP):

  • Offers 7.5% interest

  • Maturity in 115 months

• National Savings Certificate (NSC):
  Interest rate remains at 7.7%

• Monthly Income Scheme (MIS):
  Continues to offer 7.4% interest on investments

No changes have been made to interest rates for small savings schemes operated via post offices and banks. The last revision to select scheme rates was during Q4 of FY 2023-24.

Background: Why Repo Rate Cut Matters

The Reserve Bank of India (RBI) has made successive repo rate cuts this year:

• February: 25 basis points

• April: 25 basis points

• June: 50 basis points
  Total reduction: 1% (100 basis points) in 2025 so far.

These cuts prompted banks to reduce their FD interest rates, sparking concerns that small savings schemes might follow. However, the government has opted to maintain the existing rates for the current quarter.

Conclusion:
For investors in schemes like PPF, Sukanya Samriddhi, NSC, or KVP, this is welcome news—interest earnings remain stable despite repo rate cuts and falling FD returns.