On the final day of 2025, the Finance Ministry announced its decision regarding small savings schemes. In a move that ensures stability for millions of conservative savers, the interest rate for the Public Provident Fund (PPF) has been kept unchanged at 7.1% for the fourth quarter of FY 2025-26 (January 1 to March 31, 2026).
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This marks a significant stretch of continuity, as the PPF rate has remained at this level since April 2020.
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Interest Rates for Small Savings Schemes (Q4 FY 2025-26)
The government has opted for a “status quo” approach across all major instruments. Below are the finalized rates for the upcoming quarter:
| Scheme Name | Interest Rate (Jan-Mar 2026) | Compounding Frequency |
| Public Provident Fund (PPF) | 7.1% | Annual |
| Sukanya Samriddhi Yojana (SSY) | 8.2% | Annual |
| Senior Citizen Savings Scheme (SCSS) | 8.2% | Quarterly |
| National Savings Certificate (NSC) | 7.7% | Annual |
| Kisan Vikas Patra (KVP) | 7.5% (115 months) | Annual |
| Monthly Income Scheme (MIS) | 7.4% | Monthly |
| Post Office Savings Account | 4.0% | Annual |
| 5-Year Time Deposit | 7.5% | Quarterly |
The “Why” Behind the 7.1% Rate
The government typically uses the Shyamala Gopinath Committee formula, which suggests linking rates to 10-year G-Sec (Government Security) yields with a 25-basis point spread.
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The Gap: Current 10-year G-Sec yields suggest a lower rate (around 6.6% to 6.8%).
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The Decision: By maintaining 7.1%, the government is offering a “social safety net” premium, keeping the rate higher than what the strict formula would dictate to protect the interests of long-term savers and retirees.
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Quick Facts for Investors
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Tax Benefit: PPF remains one of the few EEE (Exempt-Exempt-Exempt) investments. Your investment (up to ₹1.5 lakh), the interest earned, and the maturity amount are all tax-free under the old tax regime.
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Lock-in: 15 years, with partial withdrawal allowed after the 7th year.
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Safety: Being government-backed, it carries zero credit risk, making it a preferred alternative to Bank FDs during volatile market cycles….
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