Check latest interest rates on PPF, SCSS, SSY and more

The post office savings schemes included in this decision are the Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), and a few others.

In Short

• Govt confirms no change in small savings rates
• Schemes like PPF, SCSS, SSY, NSC unaffected
• Experts predict decrease in next 6-12 months

The government has confirmed that the current interest rates for small savings schemes will stay the same for the October to December 2024 quarter.

This means there will be no changes in the rates during this period. The post office savings schemes included in this decision are the Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Post Office Time Deposits (POTD), Mahila Samman Savings Certificate, and the Post Office Monthly Income Scheme (POMIS).

In a press release dated 30th September 2024, the finance ministry said, "The rates of interest on various Small Savings Schemes for the third quarter of FY 2024-25 starting from 1st October 2024 and ending on 31st December 2024 shall remain unchanged from those notified for the second quarter of FY 2024-25."

As a result, the PPF will continue to earn an interest rate of 7.1% from October to December 2024.

How are interest rates determined?

Small savings schemes, offered through the post office, are backed by the central government and are considered a safe investment option. They also provide tax benefits under section 80C of the Income-tax Act, 1961, for schemes like NSC, SCSS, and PPF.

The government adjusts the interest rates on these schemes every quarter. The rates are set based on recommendations from the Shyamala Gopinath Committee, which suggests that the interest rates should be 25 to 100 basis points higher than government bond yields of the same maturity. This approach ensures the schemes remain attractive to investors by offering competitive returns.

The last significant adjustment to interest rates for small savings schemes occurred for the quarter ending December 2023. Some small savings schemes saw rate hikes, but the PPF rate has stayed at 7.1% since April-June 2020.

There is growing curiosity about when small savings scheme rates might begin to decrease. Some experts suggest that the government could eventually lower rates, especially after the United States Federal Reserve recently cut its rates by 50 basis points. However, any decision on this is expected to be made cautiously.

Since the Reserve Bank of India (RBI) has maintained its interest rates in recent meetings, it is unlikely that the government will make any drastic reductions to small savings scheme rates in the near future.

Investors can expect rates to stay stable for the time being, especially given the slight increases seen in recent quarters.

Experts believe that a gradual decrease in small savings interest rates could happen over the next six months to a year. With the US Federal Reserve already starting to lower its rates, it signals a possible downward trend globally. If this trend continues, it might eventually lead to a decrease in interest rates for small savings schemes in India as well.