Small savings schemes set to get more attractive as govt eases rules

The revised Senior Citizen's Savings (Fourth Amendment) Scheme, 2023, now permits depositors to extend their accounts multiple times upon maturity.

The government has eased the rules for various small savings schemes, including the public provident fund (PPF) and the senior citizen’s savings scheme, to enhance their attractiveness for investors.

Under the new norms, individuals now have three months to open an account for the senior citizen’s savings scheme, an increase from the current one-month timeframe.

According to a November 9 gazette notification, an individual can initiate the process of opening an account under the senior citizen’s savings scheme within three months from the date of receiving the retirement benefits, along with providing proof of the date of disbursal of these benefits.

As per the notification, the deposit in an account opened under the senior citizen’s savings scheme will accrue interest at the rate applicable to the scheme on the date of maturity or the date of extended maturity.

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The notification has introduced changes related to the premature closure of accounts for the PPF. The notification designates these modifications as the Public Provident Fund (Amendment) Scheme, 2023. It outlines adjustments specifically related to premature withdrawals under the National Savings Time Deposit scheme.

The notification specifies that if a deposit in a five-year account is withdrawn prematurely after four years from the date of opening the account, the interest payable would be at the rate applicable to the Post Office Savings Account.

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Under the existing norms, if a five-year time deposit account is closed after four years from the date of deposit, the interest would be calculated at the rate applicable for a three-year time deposit account.

Small savings schemes are investment options overseen by the Department of Economic Affairs (DEA) under the finance ministry.

At present, the government provides nine types of small saving schemes, which include Recurring Deposit (RD), Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), Mahila Samman Saving Certificate, Kisan Vikas Patra, National Savings Certificate (NSC), and Senior Citizen Savings Scheme (SCSS).

With PTI inputs