The Finance Ministry on Tuesday assured retail investors that their deposits in small saving schemes will remain safe, regardless of the proposed Government Savings Promotion Act.
“No existing benefits to depositors are proposed to be taken away through this process,” it said, adding that the proposed Act will also provide flexibility for premature withdrawals by minors and more rights to nominees of account holders.
“No change in interest rate or tax policy on small savings scheme is being made through this amendment. Apprehension that certain Small Savings Schemes would be closed is also without basis,” the Ministry underlined.
The government plans to merge the Government Savings Certificates Act, 1959 and Public Provident Fund Act, 1968 with the Government Savings Banks Act, 1873.
With this in mind, Finance Minister Arun Jaitley had in the Union Budget 2018-19 on February 1 proposed the Government Savings Promotion Act that would subsume the provisions of the Government Savings Certificates (NSC) Act, 1959 and the Public Provident Fund Act, 1968.
However, the move had a section of the small savers worried about the safety of their investments in such schemes and whether the new Act would bring down the protection against the attachment of PPF under a court decree to meet debt or liability of 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,” said the Ministry.
Earlier Economic Affairs Secretary Subhash Chandra Garg had also clarified on the issue and promised investors that their savings would remain safe.