Small savings schemes interest rates are a core decision factor for millions of Indian savers who prioritise capital safety, predictable returns, and government backing.
Below is a precise, scheme-wise breakdown of the nine most widely used small savings plans, focusing strictly on their current interest rates, payout structure, and relevance for different saver profiles.
Public Provident Fund (PPF)
Interest Rate: 7.1% per annum
Compounding: Annual
Tenure: 15 years (extendable)
PPF remains one of the most stable long-term small savings schemes. The interest rate is notified quarterly but historically changes infrequently. Returns are compounded annually, making it suitable for disciplined, long-term savings.
Key relevance
- Long-term wealth accumulation
- Interest credited once a year
- Government-backed capital protection
Sukanya Samriddhi Yojana (SSY)
Interest Rate: 8.2% per annum
Compounding: Annual
Tenure: Until the girl child turns 21
SSY currently offers the highest interest rate among small savings schemes. It is purpose-built for long-term financial planning for a girl child and benefits from annual compounding.
Key relevance
- Highest rate in the small savings category
- Long lock-in aligned with education and marriage planning
- Interest reviewed quarterly
Senior Citizens Savings Scheme (SCSS)
Interest Rate: 8.2% per annum
Payout: Quarterly
Tenure: 5 years (extendable)
SCSS is designed for retirees seeking regular income. Interest is paid out every quarter, making it a popular post-retirement income option.
Key relevance
- Predictable quarterly income
- Higher rate than bank fixed deposits for seniors
- Capital protected by the government
National Savings Certificate (NSC)
Interest Rate: 7.7% per annum
Compounding: Annual (paid at maturity)
Tenure: 5 years
NSC offers assured returns with a fixed tenure. Interest accrues annually but is payable only at maturity, which suits savers who do not require periodic income.
Key relevance
- Fixed return visibility
- Moderate lock-in period
- Low volatility, government-backed
Post Office Time Deposit (POTD)
Interest Rates:
- 1 year: 6.9%
- 2 years: 7.0%
- 3 years: 7.1%
- 5 years: 7.5%
Post Office Time Deposits function similarly to bank fixed deposits but are backed by sovereign assurance. Rates vary based on tenure.
Key relevance
- Multiple tenure options
- Simple, fixed-return structure
- Interest paid annually
Post Office Monthly Income Scheme (POMIS)
Interest Rate: 7.4% per annum
Payout: Monthly
Tenure: 5 years
POMIS is structured for investors seeking steady monthly income rather than long-term compounding. The principal is returned at maturity.
Key relevance
- Monthly income certainty
- Lower volatility than market-linked products
- Suitable for conservative income planning
Kisan Vikas Patra (KVP)
Interest Rate: 7.5% per annum
Maturity Period: Approximately 115 months
KVP is a lump-sum investment scheme where the invested amount doubles over a fixed period based on the prevailing interest rate.
Key relevance
- Guaranteed maturity value
- No periodic income
- Simple accumulation-focused structure
Post Office Recurring Deposit (RD)
Interest Rate: 6.7% per annum
Compounding: Quarterly
Tenure: 5 years
Post Office RD is designed for small, regular monthly contributions. It is widely used by first-time savers and households planning medium-term goals.
Key relevance
- Low monthly commitment
- Disciplined savings approach
- Predictable maturity value
Post Office Savings Account
Interest Rate: 4.0% per annum
Liquidity: High
Compounding: Annual
While not an investment product, the Post Office Savings Account is often compared within small savings schemes due to its safety and accessibility.
Key relevance
- Capital safety with liquidity
- Lower return compared to other schemes
- Suitable for parking short-term funds
How Small Savings Schemes Interest Rates Are Set
Small savings schemes interest rates are reviewed quarterly by the government and are broadly linked to yields on government securities of similar maturity. Changes are announced officially and apply for the upcoming quarter.
Important implications:
- Rates may remain unchanged across multiple quarters
- Sudden hikes or cuts are rare
- Long-term schemes reduce reinvestment risk
Comparing Small Savings Schemes Interest Rates at a Glance
| Scheme | Interest Rate | Payout Style | Tenure |
|---|---|---|---|
| PPF | 7.1% | Annual | 15 years |
| SSY | 8.2% | Annual | Up to 21 years |
| SCSS | 8.2% | Quarterly | 5 years |
| NSC | 7.7% | Maturity | 5 years |
| POTD (5Y) | 7.5% | Annual | 5 years |
| POMIS | 7.4% | Monthly | 5 years |
| KVP | 7.5% | Maturity | ~115 months |
| RD | 6.7% | Maturity | 5 years |
| PO Savings | 4.0% | Annual | No lock-in |
What Readers Should Take Away
- Small savings schemes interest rates prioritise stability over fluctuation
- Higher rates usually come with longer lock-in periods
- Income-focused schemes pay lower compounding returns
- Rates are predictable and policy-driven, not market-driven
This clarity allows readers to compare schemes objectively based on interest rate structure, tenure, and payout frequency, which directly satisfies the informational intent behind this topic.
