The government has kept interest rates on Public Provident Fund (PPF) and National Savings Certificate (NSC) unchanged for Q2 of FY26. This decision comes despite a recent cut in the RBI’s repo rate by 1%, raising questions among investors.
Government Keeps Small Savings Rates Unchanged for Q2 FY26
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PPF and NSC Rates Steady Amid Repo Rate Adjustment
The Ministry of Finance has announced that interest rates on small savings schemes including the Public Provident Fund (PPF) and National Savings Certificate (NSC) will remain unchanged for the July–September 2025 quarter (Q2 of FY26).
This comes even as the Reserve Bank of India (RBI) recently implemented a 1% reduction in the repo rate, prompting speculation about potential adjustments to fixed-income government schemes. However, PPF will continue to yield 7.1%, and NSC will offer 7.7% annual interest.
What Are the Current Interest Rates?
Here is a breakdown of some key small savings schemes and their returns for Q2 FY26:
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Public Provident Fund (PPF): 7.1%
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National Savings Certificate (NSC): 7.7%
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Senior Citizen Savings Scheme (SCSS): 8.2%
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Kisan Vikas Patra (KVP): 7.5% (matures in 115 months)
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Sukanya Samriddhi Yojana (SSY): 8.2%
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5-Year Monthly Income Scheme (MIS): 7.4%
These rates are compounded annually (except MIS) and are set quarterly by the government based on yields of government securities (G-Secs).
Why No Change Despite RBI’s Rate Cut?
Although the RBI repo rate affects lending and deposit rates across commercial banks, the interest rates of small savings schemes are determined independently by the Finance Ministry. They are aligned with G-Sec yields and other macroeconomic conditions. Experts believe the government aims to maintain investor interest in small savings schemes while controlling fiscal outflows.
What Investors Should Know
Small savings schemes like PPF and NSC are a safe investment avenue for conservative investors seeking fixed returns and tax benefits under Section 80C of the Income Tax Act. With market volatility rising, many are opting for these government-backed schemes for capital preservation.
