New Delhi, Feb 12: The closure of the public provident fund (PPF) and other small savings schemes may soon become easy as the government is reportedly looking to provide flexibility to investors to deal with financial exigencies. As per one of the amendments proposed in the Budget 2018, subscribers of small savings schemes can close their accounts prematurely. Such schemes typically don’t allow easy exits.
The government is planning to bring small savings schemes to under one umbrella law to make such schemes more attractive. This involves putting in place the Government Savings Promotion Act and repealing the Public Provident Fund Act, 1968, the Government Savings Certificate Act, 1959, and the Government Savings Bank Act, 1873. According to a proposed amendment in the Budget 2018, the government can notify norms for premature closure of small saving schemes.
“These changes are essentially aimed at removing redundant provisions and bringing parity in the norms governing all small savings schemes,” a senior finance ministry official told a financial daily. “With one law in place, this issue will get resolved and disputes will come down,” the second official was quoted as saying. The changes are being made in line with the recommendations of the Law Commission.
For the subscribers of the 15-year PPF scheme, the first withdrawal is allowed in the seventh year to the extent of 50 per cent of the balance at the end of the fourth year. In some emergency situations, premature closure is allowed after five years but at a penal loss of interest. For the settlement of disputes related to small savings, the government will also appoint an ombudsman.
“Public Provident Fund (PPF) deposits enjoy protection from being attached,” economic affairs secretary Subhash Garg said in a tweet on Saturday. “All existing protections have been saved while consolidating PPF Act under proposed Government Savings Promotion Act. Existing and new PPF deposits would continue to have this protection.”