Subject: Clarification on SB Order 05/2024 - Guidelines for Regularization of Accounts Opened in Deviation of Rules Under National Small Savings Schemes
Download SB Order 05 A/2024 in PDF
Memo No.: FS-113-03/2024
Ministry of Communications, Department of Posts, Financial Services Division, Dak Bhawan, New Delhi
In an effort to standardize practices within the National Small Savings Schemes (NSS) and address irregularities in the opening of accounts, the Ministry of Finance (MoF) has issued key clarifications on guidelines originally outlined in SB Order No. 05/2024. These latest directives, communicated through the Department of Economic Affairs (DEA), aim to ensure compliance and transparency in NSS frameworks, with specific updates on interest rates and eligibility criteria for account holders. The clarification memorandum was circulated to all Heads of Circles and Regions on October 11, 2024, for immediate implementation and guidance.
Key Clarifications
Following the DEA’s official memorandum, dated September 30, 2024, and designated as OM No. 14/1/2018-NS-Part (1), the Department of Posts highlights these essential updates:
- Interest Rate Adjustments for NSS Accounts:
- As of October 1, 2024, all accounts opened under the National Savings Scheme of 1987 (NSS 87) and the National Savings Scheme of 1992 (NSS 92) will accrue zero interest. This policy adjustment specifically impacts accounts opened in deviation of established rules and applies only to NSS 87 and NSS 92 schemes.
- Clarification on Minor Accounts with Guardianship:
- Minor account holders under the Public Provident Fund (PPF) scheme are eligible to hold or open new PPF accounts with a legal guardian. These accounts will continue to accrue the standard PPF scheme interest rate, which is currently set at 7.1% per annum.
- The guidelines apply to irregular accounts, particularly those without a legal guardian. The intent is to allow small investors who opened accounts in good faith, albeit non-compliantly, to regularize these accounts and receive appropriate guidance and support.
Purpose of the Regularization Guidelines
These updated guidelines serve to bring accounts opened outside of NSS compliance into alignment with established National Small Savings Schemes. By clarifying interest policies and regularizing minor accounts, the Ministry of Finance aims to create a rule-compliant environment that supports small investors and protects their interests.
Implementation and Compliance
In line with these clarifications, the Department of Posts is tasked with circulating the guidelines to all financial institutions, regional offices, and concerned parties. Compliance with these new directives is crucial to maintaining uniformity in the application of NSS account policies, ensuring both transparency and fairness.
Conclusion
The Ministry of Finance’s clarifications represent a proactive step to regularize and reinforce the administration of NSS accounts. By setting clear directives on interest adjustments for certain NSS accounts and guardianship requirements for minor accounts under PPF, these guidelines help build a transparent, standardized savings environment that protects the interests of small investors and fosters adherence to rules across the board.
