Interest Rates on Small Savings Schemes Unchanged for April-June Quarter of FY26
In a recent announcement, the central government has decided to keep the interest rates on small savings schemes, including the widely popular Public Provident Fund (PPF) and National Savings Certificate (NSC),
unchanged for the first quarter of the financial year 2025-26 (FY26). This move will directly impact millions of small investors who rely on these schemes for safe and stable returns.
The Department of Economic Affairs (DEA) under the Ministry of Finance, in its official notification dated March 28, 2025, confirmed that the interest rates applicable from April 1, 2025, to June 30, 2025, will remain the same as those notified for the previous quarter of January-March 2025.
Highlights of the Latest Interest Rate Announcement
✅ No Change in Small Savings Scheme Interest Rates
✅ PPF Interest Rate Remains at 7.1%
✅ NSC to Continue Offering 7.7% Interest
✅ Post Office Savings Deposit Stays at 4%
✅ Applicable for April 1, 2025, to June 30, 2025
Interest Rates for Popular Small Savings Schemes (April-June 2025)
The government has retained the existing interest rates on several popular schemes. Here’s the updated list of small savings scheme interest rates for April-June 2025:
| Small Savings Scheme | Interest Rate (April-June 2025) |
|---|---|
| Public Provident Fund (PPF) | 7.1% |
| National Savings Certificate (NSC) | 7.7% |
| Post Office Savings Account | 4.0% |
| Sukanya Samriddhi Yojana | 8.2% |
| Senior Citizens Savings Scheme (SCSS) | 8.2% |
| Kisan Vikas Patra (KVP) | 7.5% (maturity in 115 months) |
| Monthly Income Account Scheme | 7.4% |
| 5-Year Recurring Deposit Scheme | 6.7% |
| 5-Year Post Office Time Deposit | 7.5% |
What are Small Savings Schemes?
Small savings schemes are government-backed investment schemes aimed at providing safe, secure, and stable returns to small and retail investors.
These schemes are highly popular among middle-class households, senior citizens, salaried employees, and conservative investors. The government reviews and notifies the interest rates on these schemes every quarter.
The key objectives of these schemes are:
- Promoting savings habits
- Offering competitive interest rates
- Providing assured returns
- Tax-saving benefits (for some schemes like PPF, NSC, SCSS)
Why Has the Government Kept Small Savings Scheme Interest Rates Unchanged?
The government’s decision to keep the PPF, NSC, and other small savings scheme interest rates unchanged comes amid evolving global and domestic economic conditions. By maintaining the rates, the government aims to:
- Ensure stability for small investors
- Support household savings amid inflation concerns
- Avoid volatility in savings instruments
- Align with the overall interest rate trends in the economy
Many experts believe that the government took a cautious approach, keeping in view the recent trends in inflation and interest rates set by the Reserve Bank of India (RBI).
Small Savings Schemes Continue to Attract Investors
Despite no hike in rates, small savings schemes in India continue to attract massive participation due to:
- Capital safety
- Steady returns compared to market-linked products
- Tax benefits under Section 80C of the Income Tax Act (applicable on PPF, NSC, and Sukanya Samriddhi Yojana)
- Easy accessibility through post offices and banks
According to recent reports, total investments in small savings schemes have witnessed a steady rise in the last few quarters.
Benefits of Investing in Small Savings Schemes
If you are planning to invest in small savings schemes for FY26, here are some reasons why these schemes are still an excellent choice:
✅ Guaranteed Returns
Unlike market-based instruments, small savings schemes offer assured returns backed by the Government of India.
✅ Safe and Secure
The principal and interest are guaranteed by the government, making them risk-free.
✅ Tax Benefits
Investments in PPF, NSC, and Sukanya Samriddhi Yojana qualify for tax deductions under Section 80C.
✅ Retirement Planning
Schemes like Senior Citizens Savings Scheme (SCSS) and PPF are highly preferred for retirement and long-term financial planning.
✅ Compounding Benefit
Schemes like PPF and Recurring Deposit (RD) help investors benefit from compound interest over the years.
Expert Opinion on Small Savings Scheme Interest Rates FY26
Financial experts suggest that although the small savings scheme interest rates have not been increased, they still offer competitive returns compared to bank fixed deposits and are ideal for conservative investors.
According to Mr. Ramesh Mehta, a senior financial advisor,
“The unchanged rates may disappoint a few expecting a hike, but considering the safety and tax benefits these schemes offer, they remain attractive for long-term investors, especially for those looking for capital protection and steady returns.”
Should You Invest in Small Savings Schemes in April-June FY26?
Considering the unchanged but stable interest rates on small savings schemes for April-June 2025, these schemes continue to be a reliable option for:
- Salaried individuals
- Senior citizens
- Risk-averse investors
- Long-term savers
If you are planning your investments for FY26, you should definitely consider diversifying your portfolio by including small savings schemes like PPF, NSC, SCSS, or Sukanya Samriddhi Yojana based on your financial goals.
Final Words
The government’s decision to keep small savings scheme interest rates unchanged for Q1 FY26 is expected to maintain the current flow of investments.
Investors looking for secure, tax-efficient, and long-term savings instruments will continue to prefer schemes like PPF and NSC.
