Before the new year, the government has taken a big decision for those investing in small savings schemes. The Department of Economic Affairs, Ministry of Finance has announced that there has been no change in the interest rates of these schemes for the January-March 2025 quarter. This means that the same interest rates which are already fixed will remain applicable on these schemes even in the last quarter of the current financial year 2024-25.

On which schemes will this decision be applicable?

This decision will be applicable on small savings schemes like Public Provident Fund (PPF), Senior Citizen Saving Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC), Post Office Time Deposit (POTD), Mahila Samman Saving Certificate and Post Office Monthly Income Scheme (POMIS). Investors on all these schemes will currently get interest based on the previous rates. That is, those who thought that they could get more interest on these schemes in the new year, this will not happen now. 

How does the government decide interest rates?

Such small savings schemes are backed by the central government and have a sovereign guarantee. The government reviews the interest rates of these schemes every quarter. The recommendations of the Shyamala Gopinath Committee are followed to fix the interest rates. According to the committee, the interest rates of these schemes are fixed based on the yield of government bonds. The interest rates are generally kept 0.25% to 1% higher than the yield of government bonds, so that these remain attractive for investors.

When was the last time interest rates were increased?

The interest rates of small savings schemes were last changed in the January-March 2024 quarter. At that time, the interest rates of three-year post office time deposits and Sukanya Samriddhi Yojana were revised. There has been no change in the rates of these schemes since April 2024.