Small Saving Schemes New Rules: Government of India will implement significant changes will take effect for Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and other National Small Savings (NSS) schemes, as per the new guidelines issued by the Department of Economic Affairs under the Ministry of Finance from 1 October 2024. These changes focus on regularizing irregularly opened accounts and aim to streamline the management of small savings accounts across the country. So if you are also investing in any small saving scheme in India then you can read this article where we will share with you all the detailed rules and updated guidelines for the scheme.
Regularization of Irregular NSS Accounts
Several irregularities have been identified in the National Small Savings (NSS) accounts, particularly those opened under the NSS-87 scheme. The Ministry has outlined specific guidelines to address these issues:
- Two NSS-87 Accounts Opened Before April 2, 1990: If an investor has two NSS-87 accounts opened before the Directorate General’s (DG) order on April 2, 1990, the first account will continue to earn the prevailing scheme interest rate. The second account will receive the Post Office Savings Account (POSA) rate plus an additional 200 basis points on the outstanding balance. However, the total deposits across both accounts should not exceed the prescribed limits. Any excess deposits will be refunded without interest. This special dispensation is only available until September 30, 2024. After this date, both accounts will earn zero interest.
- Two NSS-87 Accounts Opened After April 2, 1990: For accounts opened after the DG’s order, the first account will receive the prevailing scheme rate, while the second account will only earn the POSA rate on the outstanding balance. Similar conditions regarding the deposit limits apply, and any excess will be refunded without interest. This special dispensation is also valid until September 30, 2024, after which both accounts will earn zero interest.
- More Than Two NSS-87 Accounts: If more than two NSS-87 accounts exist, only the first two accounts will be considered under the above rules. Any additional accounts will not earn any interest, and the principal amount will be refunded to the investor.
PPF Accounts Opened in the Name of a Minor
For PPF accounts that were irregularly opened in the name of a minor, the following guidelines apply:
– Such accounts will earn the POSA interest rate until the minor reaches the age of 18, at which point they become eligible to hold the account themselves.
– The maturity period of the account will be calculated from the date the minor attains adulthood.
Multiple PPF Accounts
If an individual holds more than one PPF account, the new rules state:
- The primary PPF account, chosen by the investor, will earn the prevailing scheme interest rate, provided the deposits remain within the yearly limits.
- The balance in any additional PPF accounts will be merged with the primary account, subject to the overall deposit ceiling. Any excess funds will be refunded without interest.
- Any further accounts beyond the primary and second accounts will earn zero interest from the date of opening
Extension of PPF Accounts by (NRIs)
The guidelines address PPF accounts that were opened by Indian citizens who later became Non-Resident Indians (NRIs):
– For active PPF accounts opened under the 1968 PPF scheme, where the residency status of the account holder was not specified in Form H, the account will earn the POSA interest rate until September 30, 2024.
– After this date, these accounts will earn zero interest.
SSA Opened in the Name of a Minor (Excluding PPF and SSY)
For small savings accounts opened in the name of minors (other than PPF and Sukanya Samriddhi Yojana), the following rule applies: Such accounts may be regularized by applying the POSA interest rate, calculated as simple interest.
Regularisation of Sukanya Samriddhi Accounts (SSA) Opened by Grandparents
The Ministry has also provided guidelines for Sukanya Samriddhi Accounts (SSA) that were irregularly opened by grandparents instead of the legal guardian:
- In such cases, the guardianship must be transferred to the rightful legal guardian, typically the natural or legally appointed guardian (usually the parents).
- If more than two SSAs were opened in violation of the scheme’s guidelines, the excess accounts must be closed, and the funds will be returned to the investors without interest.
These new rules reflect the government’s effort to ensure that small savings schemes are managed efficiently and in accordance with the prescribed guidelines. Investors are advised to review their accounts and take necessary actions to comply with the new regulations before the October 1, 2024, deadline. Failure to do so may result in the loss of interest earnings on irregular accounts.
