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.
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).
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.
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.
