Government Eases Rules for Senior Citizen’s Savings Scheme and PPF

November 11, 2023

The Indian government has introduced revised rules for various small savings schemes, including the Senior Citizen’s Savings Scheme and the Public Provident Fund (PPF), with the aim of making them more attractive to investors. These changes include extending the timeframe for opening a Senior Citizen’s Savings Scheme account and modifying premature withdrawal rules for the PPF.

Revised Senior Citizen’s Savings Scheme

Under the new norms for the Senior Citizen’s Savings Scheme, individuals now have three months to open an account, an increase from the previous one-month timeframe. According to a recent gazette notification, individuals can initiate the process of opening an account within three months from the date of receiving their retirement benefits, provided they can provide proof of the disbursal date of these benefits.

The revised scheme allows depositors to extend their accounts multiple times upon maturity. The deposit will accrue interest at the rate applicable on the date of maturity or the date of extended maturity.

Changes in Premature Closure of PPF Accounts

The notification also introduces changes related to the premature closure of accounts for the PPF. It outlines adjustments as the Public Provident Fund (Amendment) Scheme, 2023. These changes specifically address premature withdrawals under the National Savings Time Deposit scheme.

According to the notification, if a deposit in a five-year PPF account is withdrawn prematurely after four years from the date of opening the account, the interest payable would be at the rate applicable to the Post Office Savings Account. This represents a change from the existing norms where the interest would be calculated at the rate applicable for a three-year time deposit account if the account was closed after four years.

Small Savings Schemes

Small savings schemes are investment options overseen by the Department of Economic Affairs (DEA) under the finance ministry. These schemes offer a variety of investment options to individuals, including Recurring Deposit (RD), Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), Mahila Samman Saving Certificate, Kisan Vikas Patra, National Savings Certificate (NSC), and the Senior Citizen Savings Scheme (SCSS).

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