The Finance Ministry has kept interest rates on all small savings schemes unchanged for the October-December quarter of FY2026-27, as announced on September 30, 2026. The Ministry stated that 'the rates of interest on various Small Savings Schemes for the third quarter of FY 2026-27 starting from 1st October, 2026 and ending on 31st December, 2026 shall remain unchanged from those notified for the second quarter (1st July, 2026 to 30th September, 2026) of FY 2026-27'. This marks the eleventh consecutive quarter of status quo in returns across popular small savings schemes, with rates remaining unchanged for 11 consecutive quarters since the last revision in December 2024. As per the latest official notification, the decision means investors in popular savings instruments such as the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and National Savings Certificate (NSC) will continue to earn the existing rates of return during the October-December period.
The Finance Ministry has maintained the following interest rates for the October-December 2026 quarter: Public Provident Fund (PPF) at 7.1%, Sukanya Samriddhi Yojana (SSY) at 8.2%, and National Savings Certificate (NSC) at 7.7%. These rates remain unchanged from the previous quarter (July-September 2026) and continue to provide stable returns for millions of investors relying on government-backed savings instruments. The current structure includes PPF at 7.1%, NSC at 7.7%, SCSS and SSY both at 8.2%, KVP at 7.5%, and various Post Office Time Deposits ranging from 6.9% to 7.5%. The Sukanya Samriddhi Yojana, aimed at encouraging savings for the girl child, will continue to offer 8.2% interest, making it one of the highest-yielding small savings schemes. Small savings schemes are widely used by retail investors seeking secure and predictable returns and play an important role in household financial planning.
PPF continues to offer a fixed government-backed rate of 7.1% for the October-December 2026 quarter, with the rate applicable from October 1 to December 31, 2026. An investor can deposit between ₹500 and ₹1.5 lakh in a financial year, with the account having an initial maturity period of 15 years, after which it can be extended in blocks of five years. The maximum annual contribution of ₹1.5 lakh is important for investors planning their tax-saving investments, as putting more than ₹1.5 lakh into the account in a financial year does not increase the amount eligible for PPF benefits. Under the Income Tax Act, 2025, the ₹1.5 lakh aggregate deduction for specified savings investments has been retained under Section 123, making PPF attractive for taxpayers using the old tax regime. The PPF interest and maturity proceeds are also tax-exempt under applicable rules, meaning investors should not compare the 7.1% PPF rate directly with a taxable fixed-deposit rate without considering the tax impact.
PPF accounts mature in 15 years, calculated from the financial year of opening, with the maturity date determined from the end of the financial year in which the account was opened rather than the exact deposit date. For example, if you opened a PPF account in November 2011 (FY 2011-12), the account will mature on April 1, 2027. After maturity, investors have three main options: complete withdrawal, extension without deposits, or extension with deposits. If you don't submit Form 4 within one year of maturity, the account continues in five-year blocks by default but fresh contributions are not allowed. The existing balance continues to earn interest at the applicable rate (currently 7.1% per annum), and you can withdraw money only once per financial year. Form 4 can be downloaded from your bank's website or obtained by physically visiting the branch or post office where you have the PPF account. The decision to close or extend should depend on immediate financial needs, as extending provides long-term returns while withdrawing allows access to the entire tax-free corpus.
The Ministry of Finance reviews small savings rates every quarter under the market-linked framework adopted following the 2011 Shyamala Gopinath Committee report, with quarterly resets introduced in 2016. According to Rohit Jain, Managing Partner of Singhania & Co., each scheme is benchmarked to the average yield on central government securities of comparable maturity during the relevant reference period, with a prescribed spread reflecting tenure and social-policy objectives. For instance, the Senior Citizen Savings Scheme (SCSS) rate is linked to the five-year government security (G-sec) yield, with an additional 100 basis points, as the scheme has a five-year maturity period. The government may additionally consider monetary conditions, inflation, bank-deposit rates, protection of household savers, NSSF funding costs, fiscal implications and transmission of RBI policy. Jain explained that the formula is an administrative benchmark and not a self-executing statutory mandate, making the notified rate an executive determination of the competent authority, which in this case is the Union finance ministry.
