New Rules For Small Savings Schemes Starting October 1: PPF, NSS, Sukanya Samriddhi & More

The Ministry of Finance’s Department of Economic Affairs has introduced new rules for managing irregular accounts under National Small Savings (NSS) schemes through Post Offices. This update, communicated in a circular dated August 21, 2024, involves several key changes.

Irregular NSS Accounts

For NSS-87 accounts opened before DG Posts’ Order No. 35-19/90-SB-III dated April 2, 1990, the first account will receive the current scheme rate, while the second account will earn the prevailing POSA rate plus an additional 200 basis points. This applies provided the cumulative deposits do not exceed yearly limits. Excess deposits will be refunded without interest. These provisions are a one-time concession valid until September 30, 2024. From October 1, 2024, both accounts will earn zero percent interest.

For NSS-87 accounts opened after the DG Posts’ Order, the first account will receive the prevailing scheme rate, and the second account will earn the POSA rate. Again, cumulative deposits must remain within annual limits, and excess deposits will be refunded without interest. From October 1, 2024, both accounts will no longer accrue interest.

For more than two NSS-87 accounts, similar rules will apply to the first two accounts, while additional accounts will earn no interest and will have the principal refunded.

PPF Accounts in a Minor’s Name

For irregular PPF accounts opened in a minor’s name, POSA interest will be paid until the minor turns 18, after which the applicable scheme rate will apply. The maturity period will start from the date the minor becomes an adult. The primary account, chosen by the investor, will earn the scheme rate if it remains within yearly limits. Any excess balance from secondary accounts will be refunded without interest. Additional accounts will earn zero percent interest.

NRI PPF Account Extension

NRIs with active PPF accounts who did not declare their residency status will receive the POSA rate until September 30, 2024. From October 1, 2024, these accounts will earn zero percent interest.

Minor’s Small Savings Scheme Accounts (Excluding PPF and SSY)

Irregular accounts opened in a minor’s name will be regularized with simple interest at the POSA rate.

Sukanya Samriddhi Account (SSA) Regularization

For SSAs opened by grandparents who are not the legal guardians, guardianship must be transferred to the natural parents or a court-appointed legal guardian. Any accounts opened in violation of scheme guidelines, such as those by non-legal guardians or exceeding the limit, will be closed.