Small savings rates: Will PPF, SCSS and Sukanya interest rates change for October-December quarter?
Small savings rates have remained unchanged for nine consecutive quarters. With inflation and bond yields in focus, will the government raise PPF, SCSS and Sukanya Samriddhi rates from October?
Small savings schemes
The government is set to review interest rates on small savings schemes for the October-December 2026 quarter. The review comes at a time when inflation has moved and government bond yields have also hardened, raising expectations of a possible change in rates.
However, whether the government actually changes the rates will depend on multiple factors, including bond yields, the prevailing interest-rate environment and the prescribed formula used as a reference for small savings rates.
Current small savings interest rates
For the July-September quarter, the government has kept interest rates unchanged. The Public Provident Fund (PPF) currently offers 7.1 percent, while the Senior Citizens Savings Scheme (SCSS) and Sukanya Samriddhi Account offer 8.2 percent each. Other schemes, including the National Savings Certificate (NSC), Monthly Income Account and post office time deposits, offer rates ranging from 6.7 percent to 7.7 percent.
The rates have remained unchanged for nine consecutive quarters. The upcoming review will decide whether the government maintains the existing rates or makes an adjustment for the October-December period.
Why bond yields matter
Small savings rates are broadly linked to government securities (G-Secs) of comparable maturities, with a prescribed spread for different schemes. This means movements in bond yields are an important factor in determining whether rates need to be adjusted.
“Small savings rates are reviewed every quarter and are broadly linked to government bond yields of similar maturities, with a prescribed spread for different schemes. The broader interest rate environment is also considered when assessing rates for each scheme,” said Adhil Shetty, CEO, BankBazaar.
According to Shetty, the current environment could support a review of rates, but it does not automatically mean that all schemes will see an increase.
Inflation adds another factor
Consumer price inflation rose to 4.82 percent in August 2026, up from 3.48 percent in April, however, it is still far from the RBI’s upper band limit of 6 percent. At the same time, the 10-year government bond yield has moved above 7 percent, adding to the market focus on small savings rates.
“Current rates stand at 8.2 per cent for the Senior Citizens Savings Scheme and Sukanya Samriddhi, and 7.1 per cent for PPF, and have remained unchanged for ten consecutive quarters,” Shetty said.
Will rates increase from October 1?
A rise in bond yields and inflation provides grounds for considering higher rates, but the government is not mechanically bound to follow the indicative formula. Past reviews have also seen rates remain unchanged despite movements in market-linked indicators.
“Bond yields and the broader rate environment will guide the decision for the new quarter, like they have in the past,” Shetty said.
The final rates for October-December 2026 will be known after the government’s review. Until then, investors should not assume that higher inflation or bond yields will necessarily translate into higher returns across small savings schemes.
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