Latest small savings schemes interest rate: The government has announced the interest rates for post office savings schemes for the final quarter of FY 2024-25

Latest Post Office Schemes interest rates: PPF, SCSS, SSY, other small savings schemes rates announced for Jan-Mar 2025 quarter The government will again review the interest rate at the end of March 2025, to announce the interest rates for first quarter of FY 2025-26

No changes have been announced in the current interest rates for the small savings schemes for the January-March 2025 quarter. For investors, this would mean that current interest rates will remain unchanged for the final quarter of FY 2024-25. Small savings schemes, also known as Post office schemes, include Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Post Office Time Deposits (POTD), Mahila Samman Savings Certificate, and Post Office Monthly Income Scheme (POMIS) among others.

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"Interest rates on small savings schemes like PPF, NSC remain unchanged for January-March quarter", said the Department of Economic Affairs, Finance Ministry as per PTI.

As the interest rate on the post office savings schemes remains unchanged, investors in these small savings schemes will earn the following interest rate on different schemes:

Instrument	Rate of interest from Jan to March 2025 (%)
Savings Deposit	4.0
1 Year Time Deposit	6.9
2 year Time Deposit	7.0
3 year Time Deposit	7.1
5 year Time Deposit	7.5
5 Year Recurring Deposit	6.7
Senior Citizen Savings Scheme	8.2
Monthly Income Account Scheme	7.4
National Savings Certificate	7.7
Public Provident Fund Scheme	7.1
Kisan Vikas Patra	7.5 (Will mature in 115 months)
Sukanya Samriddhi Account	8.2

Source: Ministry of Finance

How government sets small savings schemes interest rates

The post office schemes are backed by the central government which provides sovereign guarantees to the schemes. The central government reviews and sets interest rates on small savings schemes every quarter.

Interest rates on these schemes are set using the methodology proposed by the Shyamala Gopinath Committee. According to the committee's recommendations, the interest rates for different small savings schemes should be established within a range of 25 to 100 basis points (100 basis points = 1%) above the yields of government bonds with corresponding maturities. This approach is designed to ensure that the interest rates offered by the small savings schemes remain competitive and appealing to investors.

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Small savings schemes: The interest rates were hiked last for Jan-March 2024

There has been no revision in the interest rate of post office savings schemes since April 2024. The government revised the interest rate for small savings schemes last in the January-March 2024 quarter. However, even at that time the interest rates for all schemes were not revised. The government revised the interest rate for the 3-year post office time deposit and Sukanya Samriddhi Yojana at that time.

Will the interest rate on post office savings schemes be reduced in the next quarter?

Central banks of different countries have started to reduce policy rates. The question is when is the Indian government likely to reduce small savings scheme rates. The Reserve Bank of India is likely to reduce the repo rate and other policy rates in 2025, as per economists.

It is likely the government will adopt a careful stance when adjusting rates for small savings schemes. As we approach the end of the period of rate hikes, it is improbable that the government will significantly lower interest rates in the future, particularly considering that small savings rates have either remained steady or been only increased slightly in the last few quarters.

This story originally appeared on: India Times - Author:Faqs of Insurances