Small Savings Schemes See 26% Inflow Surge After PPF, SCSS, SSY Rate Hike

Small savings schemes like Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), and Sukanya Samriddhi Yojana (SSY) have seen a significant jump in investor participation in FY26, as per ICRA. This comes as the government-maintained interest rates, even when banks reduced fixed deposit returns due to RBI rate cuts. 

Unchanged Interest Rates Lead to ₹2 Trillion Inflows in 8 Months 

During the first 8 months of FY26, inflows from small savings schemes including deposit certificates and PPF grew 25.5% year-on-year, reaching ₹2,00,000 crore.  

In the same period of FY25, inflows stood at ₹1,60,000 crore. This sharp rise comes as the government maintained small savings interest rates while banks trimmed deposit rates. 

This ₹2,00,000 crore figure already accounts for 65% of the FY26 Budget Estimate (BE) of ₹3,10,000 crore. By contrast, for the same period last year, only 47% of the FY25 Provisional Actual (PA) of ₹3,40,000 crore had been achieved. 

Interest Rate Stability Boosted Attractiveness Over FD Rates 

With the Reserve Bank of India cutting interest rates during the fiscal year, many banks decreased their fixed deposit returns. In contrast, the government kept the PPF, SCSS, and SSY rates unchanged throughout the financial year, including the January to March quarter. 

This made small savings schemes more attractive to individual investors seeking better returns while ensuring safety. 

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Impact on Government Cash Position 

Based on current inflow trends, even if fund mobilisation remains at year-ago levels for the remainder of FY26, it could translate to an overshoot of around ₹70,000 crore beyond the targeted amount.  

This excess mobilisation may enhance the central government’s cash balances going into FY27, particularly since market borrowings are likely to be unchanged from the FY26 BE. 

Conclusion 

The unchanged yet relatively higher interest rates on small savings schemes have led to a 26% increase in inflows in FY26 up to November. Supported by lower interest offerings from banks, these schemes have become a preferred option for many investors. The elevated inflows are now contributing to the central government’s growing cash surplus. 

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