Small savings schemes are still a popular investment option for many despite increasing financial literacy leading to people investing more in equities and mutual funds. This includes popular schemes such as the Public Provident Fund (PPF) and Senior Citizens Savings Scheme (SCSS).The Ministry of Finance decides the interest rates for all small savings schemes every quarter. For the October to December 2026 quarter, the interest rates on all small savings schemes have been kept unchanged.The decision extends the period of unchanged small savings rates to nearly two years. The government last revised the interest rate of any small savings scheme in the December 2024 review, when it raised the rates for the Sukanya Samriddhi Account (SSA) and the 3-year time deposit scheme.Also Read | Predicted to hit Rs 2 lakh, will gold prices fall to Rs 1.25 lakh per 10 grams?
Latest Interest Rates for Small Savings Schemes: How Much Will You Earn?
In an office memorandum dated September 30, 2026, the Department of Economic Affairs, Ministry of Finance, said, “The rates of interest on various small savings schemes for the third quarter of Financial Year 2026-27 starting from October 1, 2026, and ending on December 31, 2026, shall remain unchanged from those notified for the second quarter (July 1, 2026, to September 30, 2026) of FY 2026-27.”The interest rates applicable from October 1, 2026, to December 31, 2026, are as follows:
- Post Office Savings Account: 4.00% interest, compounded annually.
- 1 Year Time Deposit: 6.9% interest, with annual interest of Rs 708 on a deposit of Rs 10,000. Interest is compounded quarterly.
- 2 Year Time Deposit: 7.0% interest, with annual interest of Rs 719 on a deposit of Rs 10,000. Interest is compounded quarterly.
- 3 Year Time Deposit: 7.1% interest, with annual interest of Rs 729 on a deposit of Rs 10,000. Interest is compounded quarterly.
- 5 Year Time Deposit: 7.5% interest, with annual interest of Rs 771 on a deposit of Rs 10,000. Interest is compounded quarterly.
- 5 Year Recurring Deposit Scheme: 6.70% interest, compounded quarterly.
- Senior Citizen Savings Scheme: 8.2% interest, with quarterly interest of Rs 205 on a deposit of Rs 10,000. Interest is paid quarterly.
- Monthly Income Account: 7.4% interest, with monthly interest of Rs 62 on a deposit of Rs 10,000. Interest is paid monthly.
- National Savings Certificate (VIII Issue): 7.7% interest, with a maturity value of Rs 14,490 on a deposit of Rs 10,000. Interest is compounded annually.
- Public Provident Fund Scheme: 7.10% interest, compounded annually.
Inflation has moved higher, while G-Sec bond yields have also risen, creating a generally higher interest-rate environment. However, these two factors alone do not necessarily mean that the government should have raised the interest rates offered by small savings schemes.Although government bond yields have increased, they have not yet reached the levels of interest being offered by several small savings schemes. A number of these schemes are already offering rates above 7%.The Senior Citizens Savings Scheme (SCSS) and Sukanya Samriddhi Account (SSA), for instance, have both been offering an 8.2% interest rate for a considerable period.There is another factor to consider. During the previous few reviews, inflation was lower and bond yields were not particularly high, yet the Finance Ministry did not cut small savings rates even though several indicators pointed in that direction.The government seeks to ensure that small savings investors continue to receive an attractive real return. As a result, when inflation is elevated, interest rates on these schemes can remain somewhat higher.Higher inflation can also prompt the Reserve Bank of India (RBI) to raise its policy rate as part of efforts to contain price pressures. Changes in the policy rate can influence interest rates across the economy, including yields on Government Securities. Higher G-Sec yields, in turn, can create competitive pressure for small savings rates.Adhil Shetty, CEO, Bankbazaar told ET that small savings interest rates are generally connected to government bond yields of comparable maturities, with a specified spread applicable to different schemes.Shetty says, “These yields are therefore an important reference when rates are reviewed. G-sec yields have moved higher in recent months, which could support higher rates under the existing framework. The broader interest rate environment also matters when assessing rates for different schemes.”
