FINANCE

Six new rules for PPF, Sukanya Samriddhi Yojana, other small savings schemes with effect from October 1, 2024

The Department of Economic Affairs, Ministry of Finance, has released rules for regularizing irregularly opened accounts under National Small Savings (NSS) schemes via Post Offices. A circular was issued by the ministry announcing these changes on August 21, 2024.

Note that the Ministry of Finance has the authority to regulate small savings accounts. All irregular accounts should be referred to this division for regularization by the Ministry of Finance, as per the rule.

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The following six categories have been identified, and relevant guidelines are issued as follows: major categories include, irregular NSS accounts, PPF accounts opened in the name of a minor, more than one PPF account, extension of PPF account by NRI, and regularization of Sukanya Samriddhi Account (SSA) opened by grandparents other than guardians.

1) Irregular NSS accounts: These have been assessed to be of the following types

· Two NSS-87 accounts opened prior to DG order

· Two NSS-87 accounts opened after DG order

· ln case of more than two NSS-87 accounts

(a). Two NSS-87 accounts opened prior to DG Posts’ Order. No. 35- 19/9GSB- lll dated 02.04.1990:

(i). The earliest first opened account will get prevailing scheme rate.

(ii). The second account (opened after the first account) will get prevailing POSA rate plus 200 bps on the outstanding balance.

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(iii). Points (i) and (ii) will be subject to the following conditions:

(a). Cumulative deposits in both the accounts put together should not exceed the applicable deposit limits for each year.

(b). Excess deposits (if any) shall be refunded to the investor without any interest.

(iv). Points (i) to (iii) are in the nature of one-time special dispensation allowed to investors of NSS-87 till 30 September 2024 from the date of OM dated 12th July 2024 issued by Ministry of Finance.

(v). From 1 Oct 2024 onwards, both the accounts will earn zero percent rate of interest.

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(b). Two NSS-87 accounts opened after DG Posts’ Order. No, 35- 19/90-SB-lll dated 02.04.1 990:

(i). The earliest first opened account will get the prevailing scheme

(ii). The second account (opened after the first account) will get prevailing POSA rate on the outstanding balance, (iii). Points (i) and (ii) are subject to the following conditions:

(a). Cumulative deposits in both accounts together should not exceed the applicable deposit limit for each year.

(b). Excess deposits (if any) shall be refunded without any interest to the investor.

(iv). Points (i) to (iii) are in the nature of one-time special dispensation to the investors of NSS-87 till 30 September 2024 from the date of OM dated 12th July 2024 issued by Ministry of Finance.

(v). From 1 Oct 2024 onwards, both the accounts will earn zero percent rate of interest.

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(c). ln case of more than two NSS-87 accounts

Principles outlined for two accounts opened before/after DG Posts’ Order. No. 35-19/90-SB-lll dated 02.04.1990, shall apply. For the third account more irregular accounts, no interest shall be paid and the principal amount shall be refunded to the investor.

2. PPF account opened under the name ol a minor:

(a). POSA interest shall be paid for such irregular accounts until the individual (minor) becomes eligible for opening of account, that is, the individual attains 18 years of age. Thereafter, the applicable interest rate will be paid.

(b). Maturity period for such accounts will be calculated from the date the minor becomes an adult, that is, the date from which the individual becomes eligible to open the account.

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3. More than one PPF Account:

(a). The primary account shall earn the scheme rale of interest subject to the deposit being within the ceiling applicable for each year. (Primary Account is one of the two accounts chosen by the investor in any Post Otfice/ agency bank where the investor preters to continue with the account upon regularisation).

(b). The balance amount in the second account shall be merged with the first account subject to the primary account remaining within ttrd appriia6ie investment ceiling in each year. Post-merger, the primary account will continue to enjoy the prevailing scheme rate ot interest. Excess balance in the second account, if any, shall be refunded with Zero percent rate of interest.

(c). Any additional accounts beyond the primary and second account, shall earn zero percent rate of interest from the date of opening of that account.

4. Extension of PPF account by NRI

For only those active NRI’s PPF accounts opened under the Public Provident Fund Scheme (PPF), 1968, where Form H did not specifically ask the residency status of the account holder, POSA rate of interest shall be given to the account holder (lndian citizen who became NRI during the currency of Account) till 30th September 2024.Ihercaller, the said account shall earn zero percenl rate of interest.

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(5). Small Savings scheme account opened under the name of a minor (Except PPF and SSY)

Such irregular accounts may be regularised with simple interest. The interest rate for calculation of simple interest on the account should be the prevailing POSA rate.

6. Regularization of Sukanya Samriddhi Account (SSA) opened by Grandparents, other than Guardian.

(a). ln case of accounts opened under the guardianship of grandparents (who are other than legal guardian), the guardianship shall be transferred to a person entitled under the law in force, that is, to the natural guardian (alive parents) or Legal Guardian.

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(b). lt more than two accounts are opened in a family in violation ol Para 3 of Sukanya Samriddhi Account Scheme, 2019, then the irregular accounts shall be closed by treating it as account open

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