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Finance Ministry announces interest rates for small savings schemes for Q4 FY 2024-25
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2 min read | Updated on January 01, 2025, 07:30 IST
SUMMARY
The finance ministry’s decision not to change the interest rates of the small savings schemes offered by the post office and banks was on expected lines. Small savings schemes include the Public Provident Fund, Sukanya Samriddhi Yojana, Senior Citizens Savings Scheme, National Savings Certificates, and various other post office deposit schemes.
The government has announced small savings schemes interest rates for January-March 2025. Representational image
The Ministry of Finance on Tuesday (December 31, 2024) decided to keep the interest rates for small savings schemes unchanged for the last quarter of FY 2024-25. This means the existing rates will continue to apply in the first three months (January to March) of 2025.
The ministry notifies the interest rates for small savings schemes every quarter. However, there has been no change in the interest rates for the last four quarters.
Small savings schemes interest rates (Q4 FY2024-25)
| Scheme | Interest Rate (%) |
|---|---|
| Post Office Savings Account | 4 |
| 1-year Post Office Time Deposit | 6.9 |
| 2-year Post Office Time Deposit | 7 |
| 3-year Post Office Time Deposit | 7.1 |
| 5-year Post Office Time Deposit | 7.5 |
| 5-year Post Office Recurring Deposit | 6.7 |
| 5-year SCSS | 8.2 |
| 5-year Monthly Income Scheme | 7.4 |
| 5-year National Savings Certificate | 7.7 |
| Public Provident Fund | 7.1 |
| Sukanya Samriddhi Yojana | 8.2 |
| Kisan Vikas Patra | 7.5 (will mature in 115 months) |
Source: Ministry of Finance
The above rates will be applicable till March 31, 2025.
Small savings schemes serve two purposes. First, they help finance the central government's expenditures. And second, they instil a habit of saving regularly among citizens. These schemes specially cater to depositors from various vulnerable sections of society, including senior citizens.
The interest rates for small savings schemes are linked to government securities (G-sec) yields since 2016 based on a formula. Ideally, interest rates of small savings schemes should go up when G-sec yields rise. And they should decline when the G-sec yields decline. However, this is not the case in reality, at least at present.
In the last three months, the G-Sec yields have moderated. While this trend is expected to continue in 2025, the interest rates for most small savings schemes are well above the corresponding G-sec yields, providing room for slashing small savings interests.
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