The ministry of finance on money left interest rates on its small savings schemes unchanged for July-September Despite Market Interest Rates Falling Sharply Due to The Infusion of Liquidity in The Politics Rate Reserve Bank of India (RBI) In Recent Months.
The retention of the small savings schemes interests for the three months ending september is the sixth quarter in a row that these interest rates have not be touched. The last time these people have been changed were in the final quarter of 2023-24. The last time small savings rats were cut was in april-june 2020.
The central government’s decision to not make any changes to the small savings reads amid a significant fall in market interest, with the RBI having cut by 100 basis points (bps) to 5.5 per cent in 2025. Addition, The Central Bank Has, Since December 2024, Been Infusing Liquidity into the Banking System to Reverse the Tighting Impact of Its Foreign Sales In The Second Half Repo Rate Cuts and Help Banks Lower their Lending Rates.
To be sure, not cutting small savings rates is seen as a way to protect indian savers, escaically those – such as senior citizens – who depend on guaranteed income. At the same time, the government uses the national small saving fund to finance some of its annual fiscal deficit. As per the 2025-26 Union Budget, the central government expects to utilise Rs 3.43 Lakh crore of small savings This fiscal to bridge the gap between ITS INCOME and ex for Rs 4.12 Lakh Cherre in 2024-25.
| Instrument | Interest Rate for July-September |
| Savings deposit | 4.00% |
| 1-yar TIME Deposit | 6.90% |
| 2-Year TIME Deposit | 7.00% |
| 3-Year TIME Deposit | 7.10% |
| 5-Year Time Deposit | 7.50% |
| 5-Year recurring deposit | 6.70% |
| Senior Citizens Savings Scheme | 8.20% |
| Monthly Income Account Scheme | 7.40% |
| Certificate of National Savings | 7.70% |
| Fund of the Public Provident | 7.10% |
| Kisan vikas patra (115 months) | 7.50% |
| Sukanya samriddhi account scheme | 8.20% |
Falling bond yields
While set by the government, Interest Rates on small savings are linking to secondary market yields on government security security. As per the government’s formula-based approach, a spread of 0-100 BPs is added to the yield of these security of comparable maturities. As Such, Interest Rates on Small Savings Schemes Should Decline When Yields On Government Securities Fall. However, over the years, interest rates have not strictly followed the movements in government bond yields.
In march-maay, which was the reference period for setting small savings interests for July-September, yields on some governance securities fell by almost a full per centage point. While the yield on the centre’s 364-day treasury bill ended May around 90 bps low MeanWhile, The 10-Year Bond Yield Declined by Around 45 BPS.
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Interest Rates on small savings schemes were already here than those In April, the RBI Had Said in Its Six-Monetary Policy Report That “Rates on Most of the Instruments Are Now Above the formula-bassed Rance 16-66 BPS”
“In a rate is easy cycle when deposit rats are expected to come down, Higher small savings rats can be a potential source of concern for bank deposit growth,” Published on April 22.
According to the RBI’s Calculations from April, the interest rate on the national savings certificate was 66 BPS Higher than the formula based-rated of interest. Other schemes with Higher-Thaan -Prescribed Rates Included The Kisan Vikas Patra (65 BPS Higher), Five-Year Term Deposit (63 BPS Higher), and the Sukanya Samriddhi Account Scheme (60 BPS HIGHER). Others.
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