The government on Tuesday proposed to allow premature closure of Public Provident Fund (PPF) accounts and permit opening of small savings accounts in the name of minors, according to a Finance Ministry statement here. These changes are part of the proposed merger of the separate acts on small savings, PPF and government savings banks.
“The government has proposed merger of Government Savings Certificates Act, 1959, and Public Provident Fund Act, 1968 with the Government Savings Banks Act, 1873,” the statement said.
“With a single act, relevant provisions of the Government Savings Certificates (NSC) Act, 1959, and the Public Provident Fund Act, 1968, would stand subsumed in the new amended Act without compromising on any of the functional provision of the existing Act.” The changes proposed are aimed at adding flexibility in the operations of under the Small Savings Schemes, it added.
All existing protections have been retained while consolidating the PPF Act under the proposed Government Savings Promotion Act, the Ministry said.
“No existing benefits to depositors are proposed to be taken away through this process,” it said.
Besides ensuring existing benefits, certain new benefits to the depositors have been proposed under the bill.
“The main objective in proposing a common Act is to make implementation easier for the depositors as they need not go through different rules and Acts for understanding the provision of various small savings schemes, and also to introduce certain flexibilities for investors,” it said. Besides, benefits of premature closure of Small Savings Schemes would be introduced to deal with medical emergencies and higher education needs among others, it said.
“Another benefit, investment in Small Savings Schemes can be made by Guardian on behalf of minor(s) under the provisions made in proposed bill,” the statement added.
The bill also proposes permitting depositor to close a PPF account before five years in exigencies. At present, such accounts cannot be closed prematurely before completion of five financial years.
“To make provisions for premature closure easier in respect of all schemes, provisions could now be made through specific scheme notification,” the statement said. The amendments proposed would also allow the government to put in place a mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings.
“No change in interest rate or tax policy on small savings scheme is being made through this amendment,” it said. “Apprehension that certain Small Savings Schemes would be closed is also without basis,” the statement added, referring to some media reports in this regard.