The Ministry of Finance has announced new guidelines to manage irregular accounts in small savings schemes, which come into effect today, October 1, 2024. These guidelines cover various accounts such as the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSA), and National Savings Scheme (NSS-87). The aim is to ensure all financial institutions and post offices comply with regulations and maintain proper management of these accounts.
These changes were communicated through a circular issued by the Department of Economic Affairs on August 21, 2024.
Key Changes in Small Savings Schemes
The revised guidelines focus on six main types of irregular accounts:
- NSS-87 Accounts
For accounts opened before April 2, 1990, the first account will receive the current interest rate of the scheme, while the second account will earn a higher rate if the total deposits are within the allowed limits. After October 1, 2024, however, no interest will be paid on these accounts. For accounts opened after April 2, 1990, the first account will continue to get the prevailing interest rate, but the second account will earn a standard rate, and both must follow the deposit rules. - PPF Accounts for Minors
From now on, only one PPF account can be opened in a child’s name. If there are multiple accounts, the extra ones will be considered irregular. The interest on these irregular accounts will be reduced to 4%, compared to the regular 7.1%. This step is taken to prevent duplication and misuse of PPF accounts. - Multiple PPF Accounts
If a person holds more than one PPF account, only the main account will earn interest at the scheme’s rate. Any extra account will stop earning interest altogether. - PPF Extensions for NRIs
Non-Resident Indians (NRIs) who did not declare their residency status when keeping a PPF account will no longer earn interest on their accounts starting October 1, 2024. Before this date, they would still get interest at the Post Office Savings Account (POSA) rate, but this benefit has now ended. - Sukanya Samriddhi Accounts (SSA) Opened by Grandparents
If a Sukanya Samriddhi Account was opened by the grandparents of a minor, it will now be assigned to the child’s legal guardian. Any extra accounts opened in the same family will be closed to avoid duplication. - Minor Savings Accounts
These accounts, excluding PPF and SSA, will now earn simple interest at the Post Office Savings Account (POSA) rate until the child reaches 18 years of age. After that, the applicable interest rate for the account will apply.
These changes aim to improve the management of small savings schemes and prevent irregularities. The Ministry of Finance’s guidelines ensure better compliance and smoother operations for account holders and institutions alike. If you have any of these accounts, it is important to review them in light of these new rules to ensure your account is in good standing.
