The government has implemented new rules affecting investors with Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSAS), and National Savings Scheme (NSS-87) accounts.
These changes come after years of unregulated multiple account openings, and failure to comply may lead to account closure and loss of interest.
Here are the critical updates you need to be aware of.
1. Prohibition on Multiple PPF Accounts
As per a Finance Ministry circular dated July 12, 2024, investors are now prohibited from holding more than one PPF account.
If you have multiple accounts, you must select one as the primary account and transfer the funds from the other account(s) into it. Any excess funds in the second account will be refunded without interest.
If you maintain more than two accounts, you will not earn interest on them; interest will only be credited to the primary account.
2. Limits on Minor PPF Accounts
You can open only one PPF account for a minor in addition to your own. Instances of investors opening multiple accounts in the name of their children have been noted.
In such cases, only the primary account will earn the standard interest rate of 7.1%, while any irregular accounts will only receive 4% interest.
3. New Rules for NRIs
Indian citizens who have become non-residents (NRIs) and continue to invest in their PPF accounts will see a change in interest rates.
From July 12 to September 30, 2024, these accounts will earn only 4% interest. After this period, the interest rate will drop to 0%.
NRIs cannot open new PPF accounts, although they can maintain existing accounts until maturity.
4. Updated Regulations for Sukanya Samriddhi Yojana
The Sukanya Samriddhi Yojana can now only be opened by parents of a girl child. This change aims to prevent grandparents from opening accounts for their grandchildren.
If such accounts are found, parents must register their names to validate the account. This scheme is designed for girls under the age of 10, and currently offers an interest rate of 8.2%.
5. Closure of National Savings Scheme (NSS)
The NSS-87 scheme, which began in 1992 and was closed for new accounts in 2002, has become completely inactive.
As of July 12, 2024, only the first account holder will receive the standard interest of 7.5%.
All other NSS accounts will earn only 4% interest until September 30, 2024. After this date, interest on all NSS accounts will cease.
