Government of India makes Amendments in Small Savings Act;
Proposes
merger of Government Savings Certificates Act, 1959 and Public
Provident Fund Act, 1968 with the Government Savings Banks Act, 1873;
All existing protections have been retained while consolidating PPF Act under the proposed Government Savings Promotion Act.
Posted On: 13 FEB 2018 5:41PM by PIB Delhi
The
Government gives highest priority to the interest of small savers,
especially savings for the benefit of girl child, the senior citizens
and the regular savers who form the backbone of our country’s savings
architecture. In order to remove existing ambiguities due to multiple
Acts and rules for Small Saving Schemes and further strengthen the
objective of “Minimum Government, Maximum Governance”, Government of
India has proposed merger of Government Savings Certificates Act, 1959
and Public Provident Fund Act, 1968 with the Government Savings Banks
Act, 1873. 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.
All existing protections have been retained while consolidating PPF Act under the proposed Government Savings Promotion Act.
No existing benefits to depositors are proposed to be taken away
through this process. 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
flexibilities for the investors.
However,
concerns have been raised from different corners and also by print and
social media that the Government aims to bring down the protection
against the attachment of Public Provident Fund Account under any decree
or order of any court in respect of any debt or liability incurred by
the depositors. It is made clear that 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.
Apart from ensuring existing benefits, certain new benefits to the depositors have been proposed under the bill. These are:
- As per PPF Act, the PPF account can’t be closed prematurely before completion of five financial years. If depositor wants to close PPF account before five years in exigencies, he can’t close the account. To make provisions for premature closure easier in respect of all schemes, provisions could now be made through specific scheme notification. The benefits of premature closure of Small Savings Schemes may now be introduced to deal with medical emergencies, higher education needs, etc.
- Investment in Small Savings Schemes can be made by Guardian on behalf of minor(s) under the provisions made in the proposed bill Guardian may also be given associated rights and responsibilities.
- There was no clear provision earlier regarding deposit by minors in the existing Acts. The provision has been made now to promote culture of savings among children.
- There were no clear provisions in all the three Acts for the operation of accounts in the name of physically infirm and differently abled persons. Provisions in this regard have now been made.
- As per existing provisions of the Acts, if depositor dies and nomination exists, the outstanding balances will be paid to nominee(s). Whereas, Hon’ble Supreme Court in its judgement stated that nominee(s) is merely empowered to collect the amounts as Trustee for the benefit of legal heirs. It was creating disputes between the provisions of the Acts and verdict of Supreme Court. Hence, right of nominees have now been more clearly defined.
- In the existing Acts, there is no provision for nomination with regard to account opened in the name of minor. Further, existing Acts say that if account holder dies and there is no nomination and amount is more than prescribed limit, the amount shall be paid to legal heirs. In this case, the guardian has to obtain succession certificate. To remove this inconvenience, provisions for nomination with regard to account opened in the name of minors have been incorporated. Further the provision has been made that if the minor dies and there is no nomination, the balances shall be paid to guardian.
- The existing Acts are silent about grievance redressal. The amended Act allows the Government to put in place mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings.
- The above provisions which are proposed to be incorporated in the amended Act will add to the flexibility in operation of the Account under Small Savings Schemes.
Apart
from offering higher interest rates compared to bank deposits, some of
the small savings schemes also enjoy income tax benefits. No change in
interest rate or tax policy on small savings scheme is being made
through this amendment.
Apprehension that certain Small Savings Schemes would be closed is also without basis.
