Small savings schemes: Govt likely to decide on interest rates for October-December quarter today

The Finance Ministry is expected to announce interest rates for small savings schemes—including the Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Account (SSA), and Senior Citizens Savings Scheme (SCSS)—for the October-December 2025 quarter on Tuesday.

The announcement comes after the Reserve Bank of India (RBI) reduced the repo rate by a cumulative 1% during 2025, from 6.5% at the start of the year to 5.5% by September, with cuts in February, April, and June. Despite these reductions, small savings rates have remained unchanged so far, while commercial banks have lowered fixed deposit rates and phased out higher-interest deposit products, narrowing the relative advantage of small savings instruments. 

Small savings rates are influenced by government bond yields, which have softened during the year. The yield on the 10-year government security declined from 6.779% in January to 6.483% by late September. Rate-setting is guided by the Shyamala Gopinath Committee formula, which links small savings rates to government bond yields with an additional margin of 25 basis points. As per context, the Shyamala Gopinath Committee, formed by the RBI in 2010, recommended that small savings rates should track government bond yields, with an added margin of 25 bps. 

For the July-September 2025 quarter, rates included 4% for savings deposits, 6.9% for 1-year time deposits, 7% for 2-year, 7.1% for 3-year, 7.5% for 5-year time deposits, 8.2% for SCSS, 7.7% for NSC, 7.1% for PPF, and 8.2% for SSA. These rates are a key source of stable returns for millions of households, especially pensioners and senior citizens, as changes in rates can significantly affect their financial planning and income. Even minor shifts can alter household budgets and long-term savings strategies.