The Government of India has decided to maintain the existing interest rates on key small savings instruments for the upcoming quarter, extending a period of stability that has now lasted for two full years. This marks the eighth consecutive quarter without any change, providing predictability for millions of Indian investors who rely on these risk-free schemes for their financial goals.
Quarterly Rates: A Detailed Breakdown
In a notification released on Wednesday, the Finance Ministry confirmed the rates for the January to March quarter of 2026. The popular Public Provident Fund (PPF) will continue to yield an annual interest of 7.1%. The Sukanya Samriddhi Yojana, designed for the girl child, retains its position as the highest-yielding scheme with an 8.2% return.
Other important schemes also see their rates frozen. The National Savings Certificate (NSC) offers 7.7%, while the Kisan Vikas Patra (KVP) will provide 7.5% and mature in 115 months. The interest structure for post office schemes remains consistent:
- Post Office Savings Account: 4%
- Five-Year Post Office Monthly Income Scheme (MIS): 7.4%
- Three-Year Post Office Time Deposit: 7.1%
Stability Amidst a Falling Interest Rate Environment
This decision to hold rates comes against a backdrop of monetary easing by the Reserve Bank of India (RBI). In the calendar year 2025, the central bank reduced the repo rate in four out of six policy reviews, bringing it down by a cumulative 125 basis points to 5.25%. The most recent cut of 25 basis points was announced in early December.
These systemic rate cuts had fueled expectations of a downward revision in small savings rates as well. However, the government's move to keep them unchanged underscores the role these schemes play in providing a secure and predictable return for household savings, especially for long-term objectives like retirement, children's education, and wealth preservation.
The government reviews these rates every quarter, aligning them with prevailing government bond yields and broader market trends. The last time a revision was announced was in the fourth quarter of the 2023-24 financial year.
How Small Savings Stack Up Against Bank Offerings
For investors comparing options, small savings schemes continue to offer competitive returns. In contrast, many private sector banks offer savings account interest rates around 3.0% per annum for regular customers. Fixed deposit rates in the banking sector typically range between 6.5% and 7.5% for tenures of one to three years, with some banks offering up to 7.75% or higher for specific tenures or large deposit amounts.
The consistent rates on government-backed schemes provide a valuable anchor for risk-averse investors, ensuring that their core savings are shielded from the volatility often seen in other financial markets.
