In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman has announced a new small savings scheme for women investors. The scheme will be called Mahila Samman Saving Certificate (MSSC).
What’s the offer?
In this scheme, the deposits can be made in the name of a woman or a girl child. You can deposit up to Rs 2 lakh for a period of two years at a fixed rate of 7.5 percent. There are no tax benefits, but partial withdrawal is allowed in this scheme.
This is a one-time scheme announced in Budget 2023 and will remain available for a two-year period i.e. up to March 2025.
“Mahila Samman Savings Certificate with a higher rate of interest will encourage more women to adopt formal financial saving instruments,” said Deepak Amin, Founder and Managing Director, Light.
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How it’s different from Sukanya Samriddhi Yojana?
We already have a Sukanya Samriddhi Yojana (SSY) for a girl child. For investing in this scheme an account can be opened for a girl up to the age of 10 years and has a tenure of 21 years (account is closed after the marriage of the girl). But, deposits can only be made till the 15th year.
Liquidity is an issue in the scheme. The entire SSY corpus is locked-in till the girl attains the age of 18. And even then, only up to 50 percent of the investment amount can be withdrawn for educational needs.
“While both the newly announced Mahila Samman Savings Certificates and existing Sukanya Samriddhi Yojana cater to savings for women, the latter is only for parents looking to save for the girl child’s long-term future,” says Dev Ashish, a SEBI-Registered Investment Advisor (RIA) and Founder of StableInvestor. He added, MSSC having a two-year tenure is a short-term product, and hence, cannot ideally be compared with long-term instruments such as SSY.
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Fixed deposits Vs MSSC
The Mahila Samman Savings Certificate is a suitable alternative to fixed deposits (FDs) invested in the name of a woman for the short term. “The returns are higher than bank FDs and partial withdrawal makes liquidity less of a concern,” said Adhil Shetty, Chief Executive Officer, Bankbazaar.com.
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