New rules for Small Savings Schemes: PPF to SSY changes effective Oct 1

Government department publishes six new regulations that are applicable to investors in the National Savings Scheme, Public Provident Fund, Sukanya Samriddhi accounts

The government's Department of Economic Affairs (DEA) has issued six new rules for Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and other small savings schemes, effective October 1. The changes aim to streamline the management of these schemes and ensure compliance with the regulations. Here are the key changes investors should be aware of:

The guidelines have been categorised into the following sections:

Irregular National Savings Scheme (NSS) accounts

NSS-87 Accounts

Accounts opened before and after April 2, 1990

Before April 2, 1990: The first account will earn the current scheme rate and the second will earn the current Post Office Savings Account (POSA) rate plus 2 per cent of the balance. Beginning October 1, 2024, both accounts will receive zero per cent interest.

After April 2, 1990: The first account will earn the current scheme rate and the second will earn the current POSA rate. Beginning October 1, both accounts will receive zero per cent interest.

If someone has more than two accounts, no interest will be paid; however, the principal amount will be returned.

Public Provident Fund (PPF) accounts opened under a minor's name

Post Office Savings Account (POSA) interest will be paid for such irregular accounts until the individual who is minor becomes eligible for opening of account, that is, when the individual attains 18 years of age. Thereafter, the applicable interest rate will be paid.

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.

Multiple PPF accounts

If the total deposits across accounts remain within the annual limit, the primary account will earn interest at the prevailing scheme rate. Any balances in secondary accounts will be combined with the primary account. Any excess deposits beyond the limit will be refunded without earning any interest. More than two additional accounts will earn 0 per cent interest from their opening dates.

Extension of a PPF account by a Non-Resident Indian (NRI)

For NRI PPF accounts opened under the Public Provident Fund Scheme (PPF), 1968, where Form H did not explicitly request the residency status of the account holder, the POSA interest rate will apply to Indian citizens who became NRIs during the account's tenure until 30th September 2024. After this date, these accounts will earn zero interest.

Regularisation of Sukanya Samriddhi Account (SSA) initiated by grandparents instead of guardians.

In case of accounts opened under the guardianship of grandparents (who are other than legal guardians), 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.

If more than two accounts are opened in a family in violation of Para 3 of Sukanya Samriddhi Account Scheme, 2019, then the irregular accounts shall be closed by treating it as an account opened in contravention to the scheme guidelines.