The Finance Ministry kept interest rates unchanged for small savings schemes such as Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), National Savings Certificates (NSC) and Sukanya Samriddhi Account (SSA) in its quarterly review meeting today (Tuesday, June 30, 2026).
These unchanged interest rates for small savings schemes will be applicable for the July -September 2026 quarter.
"The rates of interest on various Small Savings Schemes for the second quarter of FY 2026-27, starting from July 1, 2026, and ending on September 30, 2026, shall remain unchanged from those notified for the first quarter (March 1, 2026, to June 30, 2026) of FY 2026-27," the Finance Ministry said in a notification.
Adhil Shetty, CEO, Bankbazaar, told ET Wealth Online that the decision to keep small savings rates unchanged points to a preference for stability at a time when inflation and market interest rates remain mixed.
"Small savings schemes are widely used by retirees and conservative investors who value predictable returns over frequent revisions. Keeping rates unchanged also provides continuity for households planning long-term savings while giving policymakers flexibility to assess evolving economic conditions over a longer period rather than responding to every quarterly movement."
After the announcement on Tuesday, deposits under the Sukanya Samriddhi Scheme will attract an interest rate of 8.2 per cent, while the rate on a three-year term deposit remains at 7.1 per cent prevailing in the current quarter.
The interest rates for popular Public Provident Fund (PPF) and post office savings deposit schemes have been retained at 7.1 per cent and 4 per cent, respectively.
The interest rate on the National Savings Certificate (NSC) will stay at 7.7 per cent for the April-June quarter.
The interest rate on the Kisan Vikas Patra will be 7.5 per cent, and the investments will mature in 115 months.
Just like the current quarter, the monthly income scheme will give investors a return of 7.4 per cent in the first quarter of the upcoming fiscal.
The government kept the interest rates for small savings steady even though strong indicators like the 10-year bond yield from Government Securities (G-Sec) and rising inflation had hinted at a likely change in interest rates.
The interest rates in small savings scheme interest rates were last changed in December 2024, when the government increased the rates of Sukanya Samriddhi Account (SSA) and 3-year Post Office term deposit scheme.
Interest rates of small savings scheme for July-September 2026 quarter
Instruments Rate of Interest w.e.f 01.07.2026 to 30.09.2026 Compounding Frequency Post Office Savings Account 4.00% Annually 1 Year Time Deposit 6.9% (Annual Interest ₹708 for ₹10,000/-) Quarterly 2 Year Time Deposit 7.0% (Annual Interest ₹719 for ₹10,000/-) Quarterly 3 Year Time Deposit 7.1% (Annual Interest ₹729 for ₹10,000/-) Quarterly 5 Year Time Deposit 7.5% (Annual Interest ₹771 for ₹10,000/-) Quarterly 5 Year Recurring Deposit Scheme 6.70% Quarterly Senior Citizen Savings Scheme 8.2% (Quarterly Interest ₹205 for ₹10,000/-) Quarterly and Paid Monthly Income Account 7.4% (Monthly Interest ₹62 for ₹10,000/-) Monthly and paid National Savings Certificate (VIII Issue) 7.7% (Maturity Value ₹14,490 for ₹10,000/-) Annually Public Provident Fund Scheme 7.10% Annually
Source: India Post
Which factors determine interest rate of small savings schemes in India?
Chartered accountant Foram Naik Sheth, KMP, Wealth Management Solutions, NPV Associates LLP, underlines three key factors that determine interest rates of small savings schemes directly and indirectly.
G-Sec yields
This is the most important factor. Higher bond yields lead to higher small savings rates.
Inflation
The government ensures that the real return that investors get remain attractive. So, if inflation is higher, small savings schemes’ rates are kept slightly higher and vice versa.
"Inflation and government bond yields are important reference points for small savings rates, but they are not the only considerations. The rate setting framework also has to account for the broader interest rate environment, the government’s cost of borrowing and the interaction between small savings schemes and bank deposits. As a result, changes in inflation or bond yields do not automatically translate into revisions in small savings rates every quarter," says Shetty.
RBI’s monetary policy
Changes in the Reserve Bank of India (RBI)’s repo rate and liquidity affect G-Sec yields and thus small savings rates.
Adhil Shetty, CEO, BankBazaar.com, told ET Wealth Online the underlying principle is that if the government can borrow at a certain rate through Government Securities (G-Secs), small savings schemes can be calibrated around those borrowing costs, with a modest premium to make them attractive to retail savers.
This framework was formalised in February 2016, when the government moved from annual resets to quarterly revisions linked to G-Sec yields from the previous quarter, explains Shetty.
Shyamala Gopinath Committee recommendations are important
Sheth points out that small savings schemes’ rates are determined using a market-linked formula recommended by the Shyamala Gopinath Committee.
As per the formula, rates are benchmarked to the average yields on Government Securities (G-Secs) of similar maturity periods from the previous quarter with a small positive spread (usually 25–100 basis points) added to make them more attractive for investors.
