Withdrawing money from small savings schemes like the provident fund may soon become a reality, thanks to new provisions proposed by the government. The government, on Tuesday, proposed to make it easier for small savings scheme holders to close their accounts early. Currently, small savings accounts like public provident fund (PPF) cannot be closed prematurely before the completion of five years. Besides, the government, on Tuesday, also proposed amendments in the Small Savings Act to subsume the provisions of PPF accounts as well as small savings schemes under a single act.
Here are 10 things that you must know about the latest proposals:
- The government proposed the merger of Government Savings Certificates Act, 1959 and Public Provident Fund Act, 1968 with the Government Savings Banks Act, 1873, according to a press release. No existing benefits to depositors are proposed to be taken away through this process, the statement added.
- 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 saving schemes, and also to introduce certain flexibility for the investors.
- 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, said the release.
- The bill does not make any amendment in interest rate or tax policy on small savings scheme.
- The statement also sought to do away with concerns raised on government’s proposals to reduce the protection against the attachment of PPF accounts. “There is no proposal to withdraw the said provision and the existing and future depositors will continue to enjoy protection from the attachment under the amended umbrella Act as well,” said the statement.
- Apart from ensuring existing benefits, certain new benefits for the depositors have been proposed under the bill.
- The latest bill proposes to make it easier for depositors to close their public provident accounts before five years. The benefits of premature closure of Small Savings Schemes may now be introduced to deal with medical emergencies, higher education needs, etc, stated the release.
- There were no clear provisions in all the three acts for the operation of accounts in the name of physically infirm and differently-abled people. Provisions in this regard have now been made, said the official statement.
- Currently, there is no clear provision regarding deposits by minors in the existing acts. The bill makes a provision to promote a culture of savings among children, according to the release.
- The bill seeks to throw more clarification on the rights of nominees, said the statement. Provisions for nomination with regard to the account opened in the name of minors have been incorporated. Further, a provision has been made that if the minor dies and there is no nomination, the balances shall be paid to the guardian, added the statement.