New Delhi: The government assured the people through a press release on Tuesday that it gives the highest priority to the interest of small savers, especially savings for the benefit of the 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”, the Union government has proposed the 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 law, the government has assured.
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 quarters 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 the existing benefits, certain new benefits to the depositors have been proposed under the Bill. As per the PPF Act, the PPF account can’t be closed prematurely before completion of five financial years. If the 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.
Investments in small savings schemes can be made by the guardian on behalf of a minor(s) under the provisions made in the proposed Bill. The 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 the 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 the existing provisions of the laws, if a depositor dies but the nomination exists, the outstanding balances will be paid to the nominee(s). Whereas the Supreme Court in its judgement stated that the nominee(s) is/are merely empowered to collect the amounts as trustees for the benefit of the legal heirs. It was creating disputes between the provisions of the Acts and verdict of the apex court. Hence, the right of nominees have now been more clearly defined, the government release asserted.
In the existing Acts, there is no provision for the nomination with regard to an account opened in the name of a 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 the nomination with regard to an account opened in the name of minors have been incorporated. Furthermore, the provision has been made that if the minor dies and there is no nomination, the balances shall be paid to the guardian.
The existing laws 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 provisions above, which are proposed to be incorporated in the amended Act, will add to the flexibility in the operation of the account under small savings schemes, the government claims.
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.
The apprehension that certain small savings schemes would be closed is also without basis, the government has assured.