Sukanya prosperity, PPF interest rate cut? RBI’s decision is the reason

Bengaluru: If you are investing in PPF, Sukanya Samriddhi Yojana (SSY) or other small savings schemes, then this news is of your use. The government will review the interest rates on small savings schemes like Sukanya Samriddhi Yojana (SSY), PPF and NSC on Monday (30 June 2025) next week. The new interest rate will be applicable from the July-September quarter of FY 2025-26.

Expected to cut interest rates: Finance Ministry In 2025, most of the post office savings schemes have not changed the interest rates. However, this time the rates are expected to change rates due to a rapid decline in bond yields and frequent cuts in repo rate by Reserve Bank of India (RBI). The RBI has recently reduced the repo rate to 50 basis points to 5.5%. With the reduction in repo rate, the bond yield has also decreased.

Repo rate reduction impact on bond yield:
As of 26 June 2025, the yield on 10 -year government bond was 6.269%. It was 6.779% at the beginning of the year. That is, it has fallen by 0.510%. It is clear that the impact of cut in repo rate Bond yield It is also visible. This decline is important because interest rates on small savings schemes indirectly are connected to the yield on government bonds. According to the data of Investing.com, the average yield on 10-year government bonds (G-SEC) from March 24 is 6.325%.

PPF interest rate may decrease:
Add ‘spread’ of 25 basis points to it, if the formula completely changes, then the PPF interest rate can come at 6.575%. This current interest rate is less than 7.10%. According to this calculation, the interest rate of small savings schemes should be reduced. This will be as per the decline in market rates. But the government will have to take the final decision on this. The government may consider other important major economic and political reasons before taking any steps.

Given the current situation, it is expected that the interest rate can be cut on small savings schemes for the second quarter (July-September) of FY 2025-26. However, the Finance Ministry will announce it on 30 June 2025. RBI has cut the repo rate three times in 2025. It has come down from 6.5 percent to 5.5 percent. Due to these deductions, banks have reduced interest rates on their fixed deposits (FD).