The Indian government has announced the interest rates for small savings schemes for the April-June 2025 quarter. Investors can breathe a sigh of relief as there has been no reduction in the interest rates despite changes in the Reserve Bank of India’s (RBI) monetary policy. The Finance Ministry confirmed that the rates will remain the same as in the previous quarter (January-March 2025), ensuring stability for those who invest in these secure government-backed schemes.
Official Circular from the Finance Ministry
On March 28, 2025, the Department of Economic Affairs under the Finance Ministry issued a circular confirming that there would be no revision in the interest rates for small savings schemes for the upcoming quarter. These schemes, which include Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), and the Senior Citizen Savings Scheme (SCSS), will continue to offer the same returns as before.
This decision provides reassurance to millions of investors who rely on these government-backed instruments for their financial security.
Interest Rates for Various Small Savings Schemes (April-June 2025)
Below are the interest rates applicable from April 1, 2025, to June 30, 2025:
- Public Provident Fund (PPF): 7.1%
- National Savings Certificate (NSC): 7.7%
- Senior Citizen Savings Scheme (SCSS): 8.2%
- Sukanya Samriddhi Yojana (SSY): 8.2%
- 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%
- Monthly Income Account Scheme: 7.4%
- Kisan Vikas Patra (KVP): 7.5% (Maturity in 115 months)
- Savings Deposit: 4%
The rates will remain unchanged from the previous quarter, ensuring that investors continue to receive the same level of returns.
Last Change in Interest Rates
The last modification in small savings interest rates occurred in the January-March 2024 quarter. At that time, the government had increased the interest rates for 3-year time deposits and Sukanya Samriddhi Yojana (SSY). The 3-year time deposit rate rose from 7.0% to 7.1%, while the SSY rate increased from 8.0% to 8.2%. Since then, there have been no changes in these rates.
How Are Small Savings Interest Rates Determined?
The Indian government reviews and adjusts small savings interest rates every quarter. These changes are based on the recommendations of the Shyamala Gopinath Committee, which was established by the Reserve Bank of India (RBI). The committee suggests that these rates should be linked to the yields of government bonds.
Generally, the interest rates of small savings schemes are 25 to 100 basis points (0.25% to 1%) higher than government bond yields. This ensures that these schemes remain attractive compared to other fixed-income options.
What This Means for Investors
The decision to keep interest rates unchanged signals stability for investors. Here’s how it impacts different groups:
1. Senior Citizens:
Those investing in the Senior Citizen Savings Scheme (SCSS) will continue to enjoy 8.2% returns, which remains one of the best fixed-income investment options for retirees.
2. Parents Saving for Children:
The Sukanya Samriddhi Yojana (SSY), offering 8.2% returns, continues to be a reliable option for securing a girl child’s financial future.
3. Long-Term Investors:
For those looking at long-term savings with tax benefits, the Public Provident Fund (PPF) still offers a steady 7.1% return with tax-free interest.
4. Fixed-Income Seekers:
Investors preferring secure returns can invest in NSC (7.7%) and 5-Year Time Deposits (7.5%), ensuring stable income without market risks.
5. Rural and Low-Income Investors:
Schemes like Kisan Vikas Patra (7.5%) continue to provide a guaranteed return over a fixed period, making them attractive to rural investors.
6. Regular Income Seekers:
The Monthly Income Account Scheme (7.4%) ensures a steady flow of income, making it a preferred choice for those relying on monthly interest payouts.
Future Outlook for Small Savings Schemes
Since the interest rates are reviewed quarterly, investors should keep an eye on the next announcement, expected at the end of June 2025. While there is no immediate change, factors like inflation, bond yields, and RBI policy decisions may influence future revisions.
For now, the stability in rates ensures that those investing in these schemes continue to earn steady returns without worrying about any downward revision. Keeping an eye on the next review will help investors make better financial decisions based on future policy changes.
