6 New Rules for PPF, Sukanya Samriddhi, and Other Small Savings Schemes.

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. Now, lets try to understand the changes that will soon be implemented through the conversational dialogue between 2 people.

Ravi: Hey, did you hear about the new rules for regularizing irregular small savings accounts starting from October 1st, 2024?

Friend: No, what’s happening?

Ravi: The Ministry of Finance has introduced some guidelines to handle irregularly opened accounts under various National Small Savings (NSS) schemes. This includes accounts like PPF, Sukanya Samriddhi Yojana, and others.

Friend: Sounds important. What kind of changes are we talking about?

Ravi: Well, they’ve identified six key categories of irregular accounts. Here’s a quick rundown:

1. Irregular NSS Accounts:
   • If you have two NSS-87* [National Savings (Monthly Income Account) Rules, 1987] accounts opened before April 1990, the first account will get the usual interest rate, while the second will get a lower rate. From October 1st, 2024, both accounts will earn zero interest.
   • If both accounts were opened after April 1990, the second account will also earn a lower interest rate, and the same rule applies after October 1st 2024.
   • If you have more than two accounts, only the first two will earn interest (under the rules mentioned). The third or more accounts will be refunded without any interest.
2. PPF Accounts Opened in the Name of a Minor:
   • These accounts will earn a lower interest rate until the minor turns 18. After that, the regular interest rate applies, and the maturity period will be calculated from when the minor becomes an adult.
3. Multiple PPF Accounts:
   • The first account will continue to earn the regular interest rate. The second account’s balance will be merged with the first, with any excess refunded without interest. Any additional accounts beyond the second will earn zero interest from the date of opening.
4. PPF Accounts Extended by NRIs:
   • NRIs who have extended their PPF accounts will get a lower interest rate until September 30th, 2024. After that, the account will earn zero interest.
5. Other Small Savings Accounts Opened in a Minor’s Name:
   • These can be regularized with simple interest at the lower rate until the minor turns 18.
6. Sukanya Samriddhi Account (SSA) Opened by Grandparents:
   • If the SSA was opened by grandparents instead of parents, the account must be transferred to the legal guardian. If more than two accounts were opened, the extra accounts must be closed as they violate the scheme guidelines.

Friend: Wow, that’s a lot to take in! Why are they doing this?

Ravi: It’s mainly to bring more structure and ensure compliance with the rules. It also helps in streamlining the benefits and interest rates for these accounts. If anyone has irregular accounts, they should regularize them before October 1st to avoid losing out on interest.

Friend: Makes sense. I’ll need to check my accounts then!