The government on Wednesday December 31, 2025, announced that the interest rates on small savings schemes, including PPF, SSY, NSC, and post office deposits, will remain unchanged for the Fourth Quarter of FY 2025-26 (from January 1, 2026 to March 31, 2026), according to a Finance ministry notification.
Interest Rate Chart:
| Scheme | Interest Rate (January-March 2026 | Interest Rate (October -December 2025) | Interest Compounded |
| Savings Account | 4.00% | 4.00% | Annually |
| 1-Year Time Deposit | 6.90% | 6.90% | Quarterly |
| 2-Year Time Deposit | 7.00% | 7.00% | Quarterly |
| 3-Year Time Deposit | 7.10% | 7.00% | Quarterly |
| 5-Year Time Deposit | 7.50% | 7.50% | Quarterly |
| 5-Year Recurring Deposit | 6.70% | 6.70% | Quarterly |
| 5-Year Senior Citizens’ Savings Scheme | 8.20% | 8.20% | Quarterly (Interest Paid Quarterly) |
| 5-Year Monthly Income Account Scheme | 7.40% | 7.40% | Monthly (Interest Paid Monthly) |
| 5-Year NSC | 7.70% | 7.70% | Annually |
| PPF (Public Provident Fund) | 7.10% | 7.10% | Annually |
| KVP (Kisan Vikas Patra) | 7.50% (Matures in 115 months) | 7.50% (Matures in 115 months) | Annually |
| Sukanya Samriddhi Account Scheme | 8.20% | 8.20% | Annually |
Since 2016, the government has been revising interest rates on small savings schemes at the beginning of each quarter. These adjustments are based on the yields of government securities of corresponding maturities, with an additional spread for senior citizens, as recommended by the Shyamala Gopinath Committee. The Economic Survey had previously suggested reducing small savings interest rates to align them with prevailing market rates, as government security yields have been in a continuous decline. Additionally, commercial banks have expressed concerns that high small savings interest rates restrict their ability to reduce deposit rates. While a downward revision in rates was anticipated for the upcoming quarter, the government has opted to maintain the existing rates.
In the April–June 2018 quarter, the Ministry of Finance revoked previous restrictions on crediting interest into Basic Savings Bank Accounts. As a result, interest earnings and maturity proceeds from small savings schemes managed by the Department of Posts can now be credited to depositors’ savings accounts at post offices or commercial banks via cheque or cash.
- The government has also modified PPF account rules to offer greater flexibility to account holders. Under the revised rules, depositors can now make deposits in multiples of ₹50, without any limit on the number of deposits, up to a maximum of ₹1.5 lakh per financial year. Previously, only 12 deposits were permitted within a financial year.(Read:
For further details, refer to the official government circular on small savings schemes.
The government resets the interest rate at the beginning of every quarter since 2016 based on yields of government securities of the corresponding maturity with some spread on the scheme for senior citizens, as advised by the Shyamala Gopinath Committee. The Economic Survey had earlier suggested that the interest rates on the small savings schemes be reduced to bring them in consonance with the interest rates prevailing in the economy, as the Yields on dated Government Securities (G-Secs) continuously on the decline. The commercial banks have also been complaining that high rates of small savings schemes prohibit them from cutting deposit rates, it was expected a downward revision in interest rates for small savings schemes for the ensuing quarter, but the government preferred to keep them unchanged.
Other important news on Small savings instruments:
During the announcement of interest for the quarter April -Jun 2018, the Ministry withdrew the earlier restrictions for credit of interest in respect of small savings to basic Savings Bank account. Now all the interest and maturity proceeds of small savings instruments operated by the Department of Posts may be paid to the depositors through the depositor’s savings account standing at a post office or any commercial bank, by cheque or in cash.
The PPF account rules were modified by the Government for the benefit of account holders. As per modified PPF account holders can now make deposits in multiples of ₹50 any number of times in a financial year with a maximum of ₹1.5 lakh a year. Earlier, a maximum of 12 deposits was permitted in a period of 1 year. Read: New rules of PPF
Disclaimer
The content provided above is intended solely for informational and explanatory purposes. It should not be considered financial advice or solicitation material. The information is based on publicly available sources and subject to change. Readers are advised to consult with a qualified financial advisor or tax professional before making any financial or tax-related decisions.
