Centre Retains Small Savings Scheme Rates for October-December Quarter with PPF at 7.1% and SCSS at 8.2%

The Ministry of Finance has announced that interest rates on various small savings schemes will remain unchanged for the third quarter of FY 2026-27, covering the period from October 1 to December 31, 2026. The Department of Economic Affairs confirmed in an official notification that rates notified for the second quarter (July–September 2026) will carry over without any modification.

With this announcement, the popular Public Provident Fund (PPF) continues to offer 7.1% per annum, while senior citizens will continue to earn 8.2% on the Senior Citizen Savings Scheme (SCSS). The move maintains rate stability across post office and government savings instruments, extending the freeze on rate revisions across the board.

Key Interest Rates for Q3 FY27

The interest rates applicable for small savings schemes during the October–December 2026 quarter remain as follows:

• Public Provident Fund (PPF): 7.10% compounded annually
• Senior Citizen Savings Scheme (SCSS): 8.20% payable quarterly
• Sukanya Samriddhi Yojana (SSY): 8.20% compounded annually
• National Savings Certificate (NSC): 7.70% compounded annually (5-year tenure)
• Kisan Vikas Patra (KVP): 7.50% compounded annually (maturity in 115 months)
• Post Office Monthly Income Scheme (POMIS): 7.40% payable monthly
• Post Office Savings Account: 4.00% per annum
• 1-Year Post Office Time Deposit: 6.90% quarterly compounding
• 2-Year Post Office Time Deposit: 7.00% quarterly compounding
• 3-Year Post Office Time Deposit: 7.10% quarterly compounding
• 5-Year Post Office Time Deposit: 7.50% quarterly compounding
• 5-Year Post Office Recurring Deposit (RD): 6.70% quarterly compounding

Formula Implication vs Policy Decision

Small savings interest rates are reviewed quarterly and linked to the yields of benchmark government securities (G-Secs) of comparable maturities, following the methodology proposed by the Shyamala Gopinath Committee. Under this framework, rates are calculated by adding a mark-up or spread of 25 to 100 basis points over the average secondary market yields of government bonds from the prior quarter.

Heading into the quarterly review, retail inflation had climbed to 4.82% in August, and benchmark bond yields had edged higher, sparking expectations among fixed-income investors for a potential rate hike. However, several small savings instruments—most notably the NSC at 7.7% and SCSS at 8.2%—already offer rates higher than what the formula strictly implies relative to secondary market yields.

Furthermore, robust small savings inflows have bolstered government coffers. Net small savings collections reached ₹1.54 lakh crore between April and July 2026, up approximately 56% compared to the ₹98,259 crore recorded during the same period in the prior year. This strong inflow reduced any immediate pressure on the government to lift deposit rates to draw more retail funding.

Investor Outlook

For middle-class households, conservative savers, and retirees, government small savings schemes remain cornerstones of personal financial planning due to their sovereign backing, absence of credit risk, and predictable payouts.

Instruments eligible under Section 80C, such as PPF, SCSS, and NSC, continue to offer substantial tax advantages, though investors need to evaluate real returns after adjusting for inflation and their respective tax brackets. With interest rates across major commercial bank fixed deposits stabilizing, sovereign schemes like SSY and SCSS at 8.2% remain among the most competitive assured-return options in the Indian debt market.

Tags: Ministry of Finance Department of Economic Affairs Public Provident Fund National Savings Certificate Senior Citizen Savings Scheme Reserve Bank of India