Small savings rates may be reduced from next fiscal

WITH THE RESERVE Bank of India cutting benchmark lending rate for the first time in five years, the Centre may lower the interest rates on small savings schemes, except for the Mahila Samman scheme, from next financial year, factoring in the easing interest rate cycle, sources said.

- PRASANTA SAHU

The interest rates on various small savings schemes were raised multiple times since the third quarter of FY23 by 70-250 basis points, reflecting the interest rate hike cycle undertaken by the RBI to curb inflation. The small savings rates have been unchanged since April 2024.

The small saving rates for Q1FY26 will be announced by the end of March.

Deposits under the Sukanya Samriddhi scheme and Senior Citizens scheme currently fetch an interest rate of 8.2% per annum, the highest among all such schemes whereas the popular Public Provident Fund is unchanged at 7.1% since April 2020.