There may be a cut in the interest rates of small-savings-schemes: Government will decide by December 31; Interest on PPF-Sukanya may reduce

For crores of investors of the country, the year 2026 may start with some changes. The central government is going to review the interest rates of small savings schemes for the January-March 2026 quarter.

Experts believe that this time the interest rates of schemes like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and Senior Citizen Savings Scheme (SCSS) can be reduced. The Finance Ministry can make an official announcement in this regard by 31 December 2025.

The main reason is the decline in the yield of government bonds

The government uses the formula of ‘Shyamla Gopinath Committee’ to decide the interest rates of Small Savings Scheme. Under this, the rates of these schemes are based on the yield of government bonds (G-Sec). The yield of 10-year government bonds has seen a decline in the last few months.

Between September and December 2025, it has been around 6.54% on average. According to the formula, after adding a spread of 0.25%, the PPF rate should be around 6.80%, whereas currently it is available at 7.1%. This difference is increasing the possibility of cut.

The government last changed the interest rates of small savings schemes in April 2024.

The effect of RBI’s repo rate cut is also visible

The Reserve Bank of India (RBI) has reduced the repo rate by about 1.25% during 2025. After this, banks have also started reducing their fixed deposit (FD) rates.

The decline in retail inflation is also encouraging the government to reduce interest rates. Usually when interest rates fall in the market, the government also revises the rates to reduce the burden on post office schemes.

Middle class and elderly will be affected

A large number of people in the country depend on post office schemes for safe investments. Especially senior citizens take recourse to SCSS (currently 8.2% interest) for their regular income.

At the same time, Sukanya Samriddhi Yojana (8.2%) is most popular for the future of daughters. If the government cuts interest rates, there will be a direct impact on the monthly earnings of middle class families and pensioners.

How much interest is being received on which scheme at present?

Currently the government is giving 7.1% interest on PPF, 8.2% interest on Sukanya Samriddhi Account and 8.2% interest on Senior Citizen Savings Scheme. 7.7% interest is available on National Savings Certificate (NSC) and 7.5% interest on Kisan Vikas Patra (KVP).

7.5% interest is being given on 5 year FD of Post Office and 7.4% interest is being given on Monthly Income Scheme (MIS). The government last made some changes in the rates in April 2024, since then they have remained stable.

Expert said – the decision is completely in the hands of the government