New Guidelines For Small Savings Accounts To PPF Effective From Today

The Ministry of Finance has released new rules to regularise irregular accounts in various small savings schemes. These guidelines apply to different accounts, including NSS-87, Public Provident Fund (PPF) accounts for minors and Sukanya Samriddhi schemes. All post offices and financial institutions are required to follow these updated procedures, as communicated in a Department of Economic Affairs circular on 21 August 2024.

The guidelines cover six key areas: NSS accounts, PPF accounts for minors, multiple PPF accounts, PPF accounts for NRIs, and Sukanya Samriddhi Accounts opened by grandparents who are not legal guardians.

New rules effective from 1 October:

NSS-87 Accounts: For accounts opened before 2 April 1990, the first account gets the current interest rate, while the second account earns a higher rate if total deposits are within limits. For accounts opened after this date, the first account receives the prevailing rate, and the second gets a standard rate. Both must follow deposit limits. From 1 October 2024, these accounts will stop earning interest.

PPF Accounts for Minors: These accounts will earn interest at the Post Office Savings Account (POSA) rate which is 4 per cent until the holder turns 18, after which the standard PPF interest rate will apply.

Multiple PPF Accounts: The main account earns interest as per the scheme as long as it remains within the yearly investment limit of Rs 1.5 lakh, while additional accounts will not earn any interest on excess deposits.

If the total balance across all accounts stays below this limit, any excess balance in a secondary account will be consolidated into the primary account.
Importantly, any additional accounts beyond the primary and secondary will not accrue interest at all.

PPF Accounts for NRIs: If the account holder becomes an NRI, the account will earn POSA interest until 30 September 2024, after which interest will stop.

Sukanya Samriddhi Accounts: These accounts will be transferred to the legal guardian. If a daughter's SSY account has been opened by a person who is not her legal guardian, then this account will now be transferred to her natural parents or legal guardian, otherwise, the account will be closed.

For those seeking secure investment options, several government-backed schemes offer attractive interest rates. Currently, the Public Provident Fund (PPF) offers a 7.1 per cent interest rate, while the Senior Citizen Savings Scheme and Sukanya Samriddhi Yojana both provide an 8.2 per cent return. 

The National Savings Certificate yields 7.7 per cent and the Post Office Monthly Income Scheme offers 7.4 per cent. Additionally, the Kisan Vikas Patra comes with a 7.5 per cent interest rate. For those considering recurring deposits, a five-year Recurring Deposit earns a 6.7 per cent interest rate. These schemes provide relatively stable and low-risk investment options, making them suitable for individuals seeking predictable returns.