Sukanya Samriddhi Account to PPF: Guidelines for irregular small savings schemes effective today, October 1

The Ministry of Finance has released new guidelines for regularising irregular accounts across various small savings schemes. These guidelines apply to multiple accounts, including NSS-87, PPF accounts for minors, and Sukanya Samriddhi schemes. All post offices and financial institutions must follow these procedures to ensure compliance and efficiency. This update was officially communicated in a Department of Economic Affairs circular on August 21, 2024.

The revised guidelines focus on six essential categories of irregular accounts: NSS accounts, PPF accounts opened in a minor’s name, multiple PPF accounts, PPF extensions for NRIs, and Sukanya Samriddhi Accounts opened by grandparents who are not legal guardians.

“A lot of new financial rules are set to become effective starting today, i.e, October 1, 2024. Going forward, you can open only one PPF account for a child. Any extra account will be considered irregular and earn interest at 4% as against the regular interest rate of 7.1%. Also, Non-Resident Indians (NRIs) who didn’t declare their residency status when keeping a PPF account will stop earning interest on their accounts starting October 1,” said Abhishek Soni, CEO and Co-founder Tax2win

Guidelines for irregular small savings schemes effective 1 October

NSS-87 Accounts: For accounts opened before April 2, 1990, the first account receives the current scheme interest rate, while the second account benefits from a higher rate, provided the total deposits remain within annual limits. For accounts opened after this date, the first account still gets the prevailing rate, but the second account will earn a standard rate, with both needing to comply with deposit limits. Beginning October 1, 2024, these accounts will yield no interest.

These accounts accrue interest at the POSA rate until the account holder reaches 18, at which point the applicable interest rate will apply.

Multiple PPF Accounts: The main account will earn interest at the scheme’s rate, while any excess in additional accounts will not earn any interest.

NRI PPF Accounts: If the account holder becomes an NRI during the account’s term, they will earn POSA interest until September 30, 2024, after which interest will cease.

Minor Savings Accounts (Excluding PPF and SSA): These accounts will accrue simple interest at the POSA rate.

Sukanya Samriddhi Accounts Held by Grandparents: The guardianship of these accounts will be assigned to the legal guardian, and any additional accounts within the same family will be closed.

Govt keeps interest rates for small saving schemes unchanged in October-December quarter

The central government has announced that interest rates for various small savings schemes will remain unchanged for the October-December quarter, as per a Ministry of Finance notification.

Interest rates for small savings schemes are typically assessed every quarter.

For October-December quarter, the interest rates on small saving schemes are as follows

Public Provident Fund (PPF): 7.1%

Senior Citizen Savings Scheme (SCSS): 8.2%

National Savings Certificate (NSC): 7.7%

Post Office Monthly Income Scheme (PO-MIS): 7.4%

Kisan Vikas Patra (KVP): 7.5%

5-Year Recurring Deposit (RD): 6.7%

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