Is Mahila Samman Savings Certificate a hit or miss? 

The Modi government steered clear of populism and considering it is a pre-election year, that reflects very highly on the credibility of PM Modi and his long-term vision.

Budget 2023 has been billed as an inclusive and empowering package by the government, which also declared it to be a vision for Amrit Kaal. Finance minister Nirmala Sitharaman called it a budget that will make women financially aware, initiating schemes that will penetrate deeper into sections of society.

It was then that she launched a one-time small savings scheme called the Mahila Samman Savings Certificate, which will be available for a two-year period up to March 2025.

The scheme will offer a deposit facility of up to Rs 2 lakh in the name of women or girls of all ages for a tenure of two years at a fixed interest rate of 7.5 percent with a partial withdrawal option.

Incentivises savings, draws women into family's financial discussion 

The scheme is set to incentivise savings with the interest rate that it offers. It is attractive to those looking for a smaller period of investment. Designed to encourage low-income families to build financial reserves, the scheme will draw women from all strata of society to move towards financial awareness.

“It has been a norm that most of the financial and investment-related decisions of households, even in the upper middle-class families, are always driven by men. This will be a great push to break that gender barrier, bringing financial inclusion to women,” said Divya Rajani, 27, who works at a public relations firm in Gurugram.

“The amount is up to Rs 2 lakhs and most homemakers save small amounts of money and put them into fixed deposits every year. This will be a chance for women to earn a higher amount of interest while also becoming aware of our financial benefits. The conversation around this should be able to draw women into financial discussion at home,” said Pragati Singh, a Mumbai-based Chartered Accountant-turned-homemaker.

Interest rate better than average, but could have been more 

The interest rate for Fixed Deposits (FDs) in the private sector and public sector banks in the country, including State Bank of India (SBI), Axis Bank, HDFC Bank and ICICI Bank, are ranging anywhere between 5 and 7 percent, depending on the term.

While SBI offers 6.75 percent on a two-year deposit, Axis Bank FDs offer 7.26 percent, HDFC Bank and ICICI Bank 7 percent. The rates are higher if the period of investment is increased.

The interest rate being offered by the Mahila Samman Savings Certificate scheme has received mixed responses. While some have argued that the interest rate is enough to motivate women towards savings, others have said that the rates could have been higher.

“The interest rate being offered for the time period is above the rates being provided by almost any bank. It is beating inflation and offering savings. With the limited time period of two years, I can even plan to save this money for my daughter’s 5th birthday, when we would be haggling over every penny to put our daughter in a school,” said Shivangi Agarwal, 28, a homemaker from Ghaziabad.

Tamanna Mannan, 25, a Mumbai-based actor, said: “The interest rate being offered could have been stretched higher, even up to 10 percent, to incentivise people from putting their money elsewhere even just for convenience.”

"Private banks are offering 7 percent where FDs can be opened at one click. This scheme requires paper work, physical visits to banks. A 0.5 percent raise I feel, would not be enough, to encourage the youth of the country to make use of the scheme.”

Investment in the scheme begins from April 1, 2023. To invest in it, a person would have to visit the nearest bank or post office offering the scheme and get the Mahila Samman Bachat Patra Yojana form. Personal, financial and nomination details along with proofs of identity and address will have to be submitted. The deposit can be made via cash or cheques only.

Scheme beats interest rate as well as time slabs for PPF, NPS 

The Mahila Samman Savings Certificate scheme beats interest rates being offered in savings schemes such as Provision Pension Fund (PPF) and National Savings Certificate (NSC) which are currently 7.1 percent and 7 percent, respectively.

The tenure of the schemes is much longer than the new scheme’s. While PPF is a 15-year-long savings avenue, offering partial withdrawal after 7 years, NSC is a five-year long scheme with no withdrawals other than in exceptional cases like the death of an investor or a court order for it.