The government has recently made changes to three of its small savings schemes — Senior Citizen’s Savings Scheme (SCSS), Public Provident Fund (PPF) and 5-year post office time deposit. The move is aimed at providing enhanced benefits and convenience to investors. Under the revised guidelines termed the Public Provident Fund (Amendment) Scheme, 2023, alterations in premature closure regulations have been introduced.
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Previously, closing a PPF account before its maturity led to a penalty, with interest permitted at a rate 1% lower than the rate credited to the account since its inception or extension.
However, the modification states that the interest on premature closure will now be calculated at a rate 1% less than the interest periodically credited to the account from the beginning of the ongoing five-year block period. This essentially means that the penalty for premature closure will now be based on the interest earned during the current block period, offering a different calculation method for determining the reduced interest rate applicable upon early closure.
In another significant move aimed at facilitating senior citizens, the updated norms now extend the duration to open an account under the Senior Citizen's Savings Scheme. Previously set at one month, this period has been elongated to a more accommodating three months.
As per the notification, individuals can now initiate the opening of an account within three months from the date of receipt of retirement benefits, offering a more relaxed timeframe along with requisite proof of disbursal dates for retirement benefits.
On the other hand, the revamped National Savings Time Deposit scheme offers altered interest structures for premature withdrawals from a five-year account. Previously, if someone withdrew prematurely after four years, the interest rate applied was similar to that of a three-year Time Deposit account.
However, with the revised scheme, if a premature withdrawal occurs after four years from opening the account, the interest rate applied will now align with that of the Post Office Savings Account, as indicated in the official notification.
Meanwhile, small savings schemes are popular investment avenues where still majority of Indians, especially senior citizens, prefer to save. Notably, the interest rates on small savings schemes are reviewed every quarter by the government. For the October-December 2023 quarter, the government kept small savings interest rates steady except for a marginal increase in five-year recurring deposit rates.
Here are the rates offered by small savings schemes for October-December 2023 quarter:
| Savings Scheme | Interest rate |
| Post Office Savings Account | 4% |
| Post Office Recurring Deposit | 6.7% |
| Post Office Monthly Income Scheme | 7.4% |
| Post Office Time Deposit (1 year) | 6.9% |
| Post Office Time Deposit (2 years) | 7% |
| Post Office Time Deposit (3 years) | 7% |
| Post Office Time Deposit (5 years) | 7.5% |
| Kisan Vikas Patra (KVP) | 7.5% |
| Public Provident Fund (PPF) | 7.1% |
| Sukanya Samriddhi Yojana | 8% |
| National Savings Certificate | 7.7% |
| Senior Citizens’ Saving Scheme (SCSS) | 8.2% |
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