FinMin leaves interest rates on small savings schemes unchanged for Q4FY25

Small savings schemes are majorly operated by post offices

The Finance Ministry on December 31 left the interest rates on various small savings schemes unchanged for the quarter beginning January 1, 2025.

This marks the fourth consecutive quarter that these rates remain unchanged.

"The rates of interest on various Small Savings Schemes for the fourth quarter of FY 2024-25 starting from 1st January, 2025 and ending on 31st March, 2025 shall remain unchanged from those notified for the third quarter (1st October, 2024 to 31st December, 2024) of FY 2024-25," as per a notification from the finance ministry.

The central government notifies the interest rates on small savings schemes, majorly operated by post offices and banks, every quarter.

This means that savers will earn the following interest rates on the some of the key schemes--

•Sukanya Samriddhi Scheme -- 8.2 percent,
•Three-year term deposit -- 7.1 per cent
•Public Provident Fund (PPF) 7.1 percent
•Post office savings deposits schemes -- 4 percent
•Kisan Vikas Patra -- 7.5 percent (Will mature in 115 months)
•National Savings Certificate (NSC) -- 7.7 per cent.
•Monthly Income Scheme -- 7.4 percent
•Senior Citizen Savings Scheme -- 8.2 percent

Small savings interest rates, while set by the government, are linked to market yields on government securities at a spread of 0-100 basis points over the yield of these securities of comparable maturities. As such, when market yields on government securities fall, interest rates on small savings schemes are typically lowered.

However, the link between interest rates on small savings and yields on government securities has weakened over a period of time.