Has government increased SSY, PPF, NSC, other small savings schemes' interest rates for October-December 2026 quarter?

In the quarterly review meeting of small savings interest rates today (Wednesday, September 30, 2026), the Ministry of Finance has left the rates of small savings schemes, including the Public Provident Fund (PPF) and the Senior Citizens Savings Scheme (SCSS), unchanged. With this, the spell of unchanged rates continued for nearly two years as the government last changed the rate of any small savings scheme in the December 2024 review, when the rates of Sukanya Samriddhi Account (SSA) and the 3-year time deposit scheme were increased.

Small savings scheme interest rates after Finance Ministry’s review meeting

Instruments	Rate of Interest w.e.f 01.10.2026 to 31.12.2026	Compounding Frequency
Post Office Savings Account	4.00%	Annually
1 Year Time Deposit	6.9% (Annual Interest ₹708 for ₹10,000/-)	Quarterly
2 Year Time Deposit	7.0% (Annual Interest ₹719 for ₹10,000/-)	Quarterly
3 Year Time Deposit	7.1% (Annual Interest ₹729 for ₹10,000/-)	Quarterly
5 Year Time Deposit	7.5% (Annual Interest ₹771 for ₹10,000/-)	Quarterly
5 Year Recurring Deposit Scheme	6.70%	Quarterly
Senior Citizen Savings Scheme	8.2% (Quarterly Interest ₹205 for ₹10,000/-)	Quarterly and Paid
Monthly Income Account	7.4% (Monthly Interest ₹62 for ₹10,000/-)	Monthly and paid
National Savings Certificate (VIII Issue)	7.7% (Maturity Value ₹14,490 for ₹10,000/-)	Annually
Public Provident Fund Scheme	7.10%	Annually

Source: India Post website


Did high inflation and govt bond yield suggest a change in small savings scheme interest rates?

Inflation is high, and the G-Sec bond yield is also up. These factors create an overall high-interest-rate scenario. However, that doesn’t necessarily mean that the government should have increased small savings scheme interest rates just on the basis of these two factors.

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Government bond yields are high, but they are still to come close to the interest rates offered by small savings schemes. Many of these schemes have already been offering an interest rate of over 7%. The SCSS and the SSA have been jointly offering an 8.2% rate for a long time.

In its last few reviews, when inflation was low and bond yields were also not high, the Finance Ministry refrained from decreasing small savings scheme rates despite many indicators suggesting so. Since it had been giving relaxation to small savings scheme investors for a long time, the big question ahead of today’s meeting was: would the government increase the rates, as the indicators were supporting this view? But the government refrained from that, most likely because small savings schemes have already been offering high rates.

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Role of inflation in small savings scheme interest rates

The government ensures that the real return that investors get from small savings schemes stays attractive. So, if inflation is high, small savings schemes’ rates can be kept slightly higher.

When inflation rises, the Reserve Bank of India (RBI) often goes for a policy rate increase to manage inflation. Such a policy rate change raises overall interest rates in the economy, including those of Government Securities. The high G-Sec rate can put competitive pressure on small savings rates.

If we cast a glance at Consumer Price Index (CPI) inflation data of the last few months, inflation rose from 3.48% in April 2026 to 4.82% in August. However, it is still far from the RBI’s upper band limit of 6%, but some inflationary pressures can be felt at the current levels too. Not just that, inflation is estimated to rise further in the next few months. The government has not changed the rates this time, but high inflation may compel the government to consider increasing small savings scheme interest rates.

G-Sec bond yield is high

What a high G-Sec bond yield puts pressure on the government to increase small savings scheme rates can be understood by a market-linked formula recommended by the Shyamala Gopinath Committee in 2014.

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As per the formula, small savings scheme rates are benchmarked to the average yields on Government Securities (G-Secs) of similar maturity periods from the previous quarter with a positive spread (usually 25–100 basis points) added to make them look more attractive for investors.

Take the example of the PPF interest rate, which is 7.1% per annum. The near-3-month average of the 10-year G-Sec yield (from July 1, 2026, to September 30, 2025) is approximately 6.875%, as per data from Investing.com. If we add 25 basis points to it, the rate rises to 7.125%, which is higher than the interest rate of the PPF. It means the government could have increased the interest rate of the PPF if it wanted.

However, the Shyamala Gopinath Committee formula is a recommendation, and the Finance Ministry is not bound by it. The government has overlooked the formula many times to keep the rates high. It has overlooked it this time as well.

Aakanksha Shukla, AVP, wealth management, Master Capital Services Limited, told ET Wealth Online that for the October quarter that bond yields have hardened over the July-September period, with the 10-year yield rising above 7%.

“August inflation at 4.82% points the same way. On the long end, the formula has broadly caught up with what the PPF already pays, while the SCSS still sits above its formula value,” says Aakanksha.

Adhil Shetty, CEO, Bankbazaar, says that small savings rates are broadly linked to government bond yields of similar maturities, with a prescribed spread for different schemes.

Shetty says, “These yields are therefore an important reference when rates are reviewed. G-sec yields have moved higher in recent months, which could support higher rates under the existing framework. The broader interest rate environment also matters when assessing rates for different schemes.”

What high small savings scheme rates mean for government

If you look at small savings scheme interest rates in the table above, you can see that the savings account rate is 4%, while all other schemes are providing rates of 6.7% and higher. These are some of the best rates provided by low-risk, stable-return investments, including public sector bank savings accounts and fixed deposits (FDs). In a high-rate atmosphere, the government might not have felt pressure to increase small savings rates.