In a bid to remove existing ambiguities due to multiple Acts and rules for Small Saving Schemes 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. Consequentially, Government has proposed ‘Government Savings Promotion Act’, a new amended umbrella Act which subsumes the relevant provisions of above stated acts.
Objectives of proposed Government Savings Promotion Act:
The main objective of this proposed 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.
- The new act also seeks to introduce certain clarifications, flexibilities and benefits for the investors.
- It is to be noted that no change in interest rate or tax policy on small savings scheme is being made through this amendment.
- Besides, existing and future depositors will continue to enjoy protection from the attachment under this amended umbrella Act.
Salient Features of proposed ‘Government Savings Promotion Act’:
As per PPF Act, the PPF account cannot be closed prematurely before completion of five financial years, not even in exigencies. The new act will introduce provisions that would permit premature closure of Small Savings Schemes to deal with medical emergencies, higher education needs, etc.
- Guardian will be permitted to make investment in Small Savings Schemes on behalf of minor(s) and they will also be given associated rights and responsibilities.
- The existing acts did not have clear provision regarding deposit by minors. The new amended act will introduce provisions to promote culture of savings among children.
- The amended act will have clear provision for the operation of accounts in the name of physically infirm and differently abled persons.
- Right of nominees have now been more clearly defined in line with Supreme Court judgement that nominee(s) is/are merely empowered to collect the amounts as Trustee for the benefit of legal heirs.
- Provisions for nomination with regard to account opened in the name of minors have been incorporated.
- Through the amended act, Government has been allowed to put in place a mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings.