Investors are waiting to see whether interest rates on Post Office small savings schemes like PPF, NSC, and others will be reduced.
The Ministry of Finance will review these rates on September 30, 2025, and the new rates will apply for the October–December 2025 quarter.
The last revision was in January–March 2024. Even though the RBI has cut the repo rate three times this year (a total of 1%), the government has not reduced rates for small savings schemes so far.
Fixed deposit rates in banks, however, have gone down.
Schemes like Sukanya Samriddhi Yojana and the Senior Citizen Savings Scheme have remained unchanged.
Experts now expect a possible cut this time.
Impact of RBI Cuts and Bond Yields
According to an ET report, RBI reduced the repo rate by:
25 bps in February,
25 bps in April, and
50 bps in June 2025.
Following this, banks lowered FD rates and discontinued special deposit schemes.
Bond yields also dropped — the 10-year G-Sec yield fell from 6.779% (Jan 1, 2025) to 6.483% (Sept 24, 2025).
Although it rose slightly in recent months, it is still lower than in January.
As per the Shyamala Gopinath Committee, small savings rates are linked to G-Sec yields plus a 25 bps spread.
For example, the 5-year time deposit rate is based on the 5-year G-Sec yield +25 bps.
The average 10-year G-Sec yield (June 24–Sept 24, 2025) was 6.411%.
Adding 25 bps gives 6.66%, compared to the current PPF rate of 7.1%.
This indicates rates may fall, but the government doesn’t always strictly follow the formula.
Decisions also depend on economic, social, and political factors.
- Current Interest Rates (July–Sept 2025)
- Savings deposit – 4%
- 1-year FD – 6.9%
- 2-year FD – 7%
- 3-year FD – 7.1%
- 5-year FD – 7.5%
- 5-year recurring deposit – 6.7%
- Senior Citizen Scheme – 8.2%
- Monthly Income Scheme – 7.4%
- NSC – 7.7%
- PPF – 7.1%
- Kisan Vikas Patra – 7.5% (maturity in 115 months)
- Sukanya Samriddhi Yojana – 8.2%
- In the last revision, the 3-year FD rate was raised from 7% to 7.1%, and Sukanya Samriddhi Yojana increased from 8% to 8.2%.
- Other schemes were unchanged.
- Expert Advice
- Experts suggest a rate cut is highly likely, though the government may also choose to keep rates steady.
- According to Santosh Agarwal, CEO of Paisabazaar, the government will avoid reducing rates too quickly since this affects pensioners and senior citizens.
- He recommends investing now in lock-in schemes like NSC and SCSS, so that investors can secure the current rates before any cut.
