Small Savings Scheme: An important update is coming at the end of the year for those investing in small savings schemes. The Ministry of Finance will review the interest rates of all Post Office small savings schemes on December 31, 2025.  Following this review, new interest rates for the January-March 2026 quarter will be announced, which will be effective from January 1, 2026. This review is considered particularly significant because the interest rates on these schemes have not been changed for the past seven quarters.

Who Decides the Interest Rates?

The Ministry of Finance decides the interest rates for Post Office small savings schemes such as PPF, Sukanya Samriddhi Yojana, Senior Citizen Savings Scheme, National Savings Certificate, Kisan Vikas Patra, and Post Office Monthly Income Scheme. In the last review held in September 2025, the government kept all the rates unchanged. However, given the current market conditions and government bond yields, a change is now expected.

Most Discussion Around PPF Interest Rate

This time, the most discussion is centered around the interest rate of the Public Provident Fund (PPF). Currently, PPF offers an annual interest rate of 7.1 percent. There are some indications that this rate might be reduced. If this happens, it would be considered the lowest PPF interest rate in nearly 50 years. Although the government has not yet made any official statement on this, it has certainly increased concern among investors.

Rates Unchanged for Several Quarters

The interest rates on small savings schemes have not been changed for the past seven quarters. The rates set for the April-June 2024 quarter are still in effect. This raises the question of whether the government will end this long wait in the January-March 2026 quarter or whether the rates will remain unchanged once again.

Sukanya Samriddhi Yojana Interest Rate

The Sukanya Samriddhi Yojana currently offers an annual interest rate of 8.2 percent. This scheme is specifically designed to cover the education and marriage expenses of daughters. The interest earned is compounded annually, resulting in significant savings over the long term. A decrease in interest rates could impact families investing for their daughters’ future.

Status of Senior Citizens Savings Scheme

The Senior Citizens Savings Scheme is also quite popular among the elderly. Currently, it offers an annual interest rate of 8.2 percent. A key feature of this scheme is that the interest is credited to the account every three months, providing senior citizens with a regular income. Any change in the interest rate will directly affect the financial planning of retired individuals.

Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme is for investors who require a fixed monthly income. This scheme currently offers an annual interest rate of 7.4 percent, which is transferred to the account every month. The middle class and retired individuals prefer this as a safe investment option.

Current Interest Rates on NSC and PPF

National Savings Certificates (NSC) currently offer an interest rate of 7.7 percent. The 7.1 percent interest earned on PPF is completely tax-free. This is why both these schemes are considered among the most reliable for long-term, secure investments. If their interest rates are reduced, investors may have to consider other options.

How Interest Rates are Determined

The government reviews the interest rates of small savings schemes every quarter based on the recommendations of the Shyamala Gopinath Committee. According to the committee, the interest rates of these schemes should be 25 to 100 basis points higher than the yield of government bonds of the corresponding tenure. However, the government is not bound to follow these recommendations and sometimes makes different decisions, keeping in mind the interests of ordinary investors.

Now, all eyes are on the meeting scheduled for December 31, 2025. If interest rates are cut, investors could face a setback. However, if the rates increase or remain at the current level, it will be a relief. In this situation, investors are advised not to make any hasty decisions and to wait for an official announcement.