Before the start of the new year, big news is coming for investors. On December 31st, the central government will decide on the interest rates for PPF, Sukanya Samriddhi Yojana (SSY), NSC, KVP, and other small savings schemes. Any change in rates will directly impact your savings and returns. Therefore, every investor needs to know how much interest they will earn on their savings in 2026.
Investors in small savings schemes will receive a major update at the end of the year. The Finance Ministry is scheduled to review the interest rates for all post office small savings schemes on December 31, 2025. Following this review, new interest rates will be announced for the January-March 2026 quarter, effective January 1, 2026. This review, which takes place every three months, is considered significant because interest rates have remained unchanged for the past seven quarters.
Who takes the decision?
The Finance Ministry decides on interest rates for schemes such as the Public Provident Fund ( PPF ), Sukanya Samriddhi Yojana ( SSY ), Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Kisan Vikas Patra (KVP), and Post Office Monthly Income Scheme ( POMIS ). The government had kept the rates unchanged in the last review in September 2025, but given market conditions and bond yields, speculation about a change has intensified.
This time, the most discussed topic is the interest rate on the Public Provident Fund (PPF). Currently, PPF offers an annual interest rate of 7.1%. There are indications that this rate could be reduced. If this happens, it would be the lowest PPF interest rate in nearly 50 years. Although the government has yet to officially confirm this, investors appear to be quite concerned.
There have been no changes to the interest rates on small savings schemes for the past seven quarters. The rates set for April-June 2024 remain in effect. The question arises whether the government will break this long pause in the January-March 2026 quarter, or whether investors will be disappointed once again.
SSY interest
The Sukanya Samriddhi Yojana (SSY) currently offers an interest rate of 8.2% per annum. This scheme was specifically designed to cover the education and marriage expenses of daughters. The interest earned on investments is compounded annually, allowing a substantial amount to accumulate over the long term. A reduction in interest rates will directly impact parents planning for their daughters’ futures.
SCSS interest
The Senior Citizens Savings Scheme (SCSS) is also very popular among retired individuals. It currently offers an interest rate of 8.2% per annum. Its special feature is that interest payments are credited directly to accounts every three months, providing regular income for senior citizens. If the rates of this scheme change, the monthly plans of millions of pensioners and senior citizens could be affected.
Interest on POMIS
The Post Office Monthly Income Scheme (POMIS) is ideal for those who need a fixed monthly income. This scheme currently offers an interest rate of 7.4% per annum, which is transferred to the account every month. This scheme is particularly popular among middle-class and retired individuals.
How much is the interest on NSC?
The National Savings Certificate (NSC) currently offers 7.7% interest, while the 7.1% interest on the Public Provident Fund (PPF) is completely tax-free. This is why both schemes are preferred for safe, long-term investments. If interest rates on these schemes decline, investors may need to consider alternative investment options.
Now, the question is how the interest rates for these post office schemes are determined. The government reviews interest rates every quarter based on the recommendations of the Shyamala Gopinath Committee. According to the committee, interest rates on small savings schemes should be 25 to 100 basis points higher than the yield on government bonds for the corresponding period. However, the government is not bound by these recommendations and sometimes takes a different decision in the public interest.
All eyes are now on the meeting scheduled for December 31, 2025. A rate cut could be a shock to investors, while a rate increase or a steady one would be a welcome relief. Therefore, investors are advised not to make any panic decisions and wait for the official announcement.
