At the start of the new year, investors tracking small savings schemes such as Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and National Savings Certificate (NSC) may feel slightly disappointed, as the government has decided to keep their interest rates unchanged. However, there is still good news for those looking for higher and secure returns. A government-backed investment option is currently offering interest of more than 8 percent, making it an attractive alternative to traditional small savings schemes and fixed deposits.
For the March quarter, the government has once again maintained the status quo on interest rates for all small savings schemes. This marks the eighth consecutive quarter with no revision in rates. Popular schemes such as PPF, Sukanya Samriddhi Yojana, NSC, and others continue to offer the same returns as before.
At present, the highest interest among small savings schemes is being offered by the Senior Citizens Savings Scheme (SCSS) and Sukanya Samriddhi Yojana, both at 8.2 percent. The Public Provident Fund continues to offer an interest rate of 7.1 percent. While these rates remain attractive for risk-averse investors, there is another government-issued option that provides comparable or even better returns without investment limits.
RBI Floating Rate Bonds have emerged as one of the safest and most rewarding investment options for conservative investors. These bonds currently offer an interest rate of around 8.05 percent, which is higher than most long-term bank fixed deposits and comparable to the top small savings schemes.
Since these bonds are issued by the Government of India through the Reserve Bank of India, they come with a sovereign guarantee. This means the risk of default is almost zero, making them safer than corporate bonds and, in many cases, even safer than bank deposits.
One of the biggest advantages of RBI Floating Rate Bonds is their flexible interest structure. Unlike fixed deposits, where the interest rate is locked at the time of investment, floating rate bonds adjust their interest rate periodically. If market interest rates rise, the return on these bonds also increases, helping investors protect their earnings against inflation and changing rate cycles.
Another major benefit is the absence of any maximum investment limit. While schemes like SCSS have a cap of ₹30 lakh and Sukanya Samriddhi allows a maximum annual investment of ₹1.5 lakh, RBI Floating Rate Bonds do not impose any upper ceiling. Investors can invest according to their financial capacity and long-term goals.
Additionally, investment in these bonds can start with as little as ₹1,000, and investors can increase their investment without restrictions. This flexibility makes the scheme suitable for both small and large investors.
RBI Floating Rate Bonds pay interest every six months, providing a steady income stream. The principal amount remains fully protected, which is a key consideration for conservative and senior investors who prioritize capital safety along with predictable returns.
Compared to long-term bank fixed deposits, which typically offer interest in the range of 6 to 7 percent, these bonds provide a clear advantage in terms of returns, especially during periods of stable or rising interest rates.
The interest rate on RBI Floating Rate Bonds is linked to the interest rate of the National Savings Certificate, along with a fixed spread of 0.35 percent. The coupon rate is reset every six months, on January 1 and July 1.
For the July–December 2025 period, the interest rate was set at 8.05 percent. The same rate has been continued for the January–June period as well. Since the rate is reviewed and reset periodically, investors benefit from upward movements in interest rates without needing to reinvest.
RBI Floating Rate Bonds are ideal for investors looking for high safety, stable income and returns better than traditional fixed deposits. They are particularly suitable for retirees, conservative investors and those with surplus funds who want to avoid market volatility while still earning competitive interest.
While interest rates on PPF, Sukanya Samriddhi and NSC remain unchanged in the new year, RBI Floating Rate Bonds offer a compelling alternative for those seeking over 8 percent interest with government backing. With no investment limit, minimal entry amount and zero default risk, these bonds continue to be one of the most secure and rewarding fixed-income investment options available today.
