Small Savings Schemes (SSS)

Why in News?

The Union Cabinet has proposed the Government Savings Promotion Act by merging the Public Provident Fund (PPF) Act of 1968, the Government Savings Banks Act of 1873 and the Government Savings Certificates Act of 1959.




i)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.


ii)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.


iii) To make provisions for premature closure easier in respect of all schemes, provisions could now be made through specific scheme notification.


iv)Investment in Small Savings Schemes can be made by Guardian on behalf of minor(s)


v)There was no clear provision earlier regarding deposit by minors or physically infirm and differently abled persons in the existing Acts. Provisions in this regard have now been made.


vi)The existing Acts 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.


Small Savings Scheme

They are an important source of household savings in India. Different small saving schemes have mobilized money from households and channelized it to the government so that the centre and states can finance a part of their expenditure.


Funds collected under SSS are the liabilities of the Union government accounted for in the Public Accounts of India and the government acts like a banker or trustee.


The Small Savings Schemes can be grouped as-


(i) Post office Deposits: Post Office Savings Account, Post Office Time Deposits (1,2,3 and 5 years), Post Office Recurring Deposits, Post Office Monthly Account,


(ii) Savings Certificates: National Savings Certificate and KisanVikasPatra


(iii) Social Security Schemes: Public Provident Fund, Senior Citizens Savings Scheme, and Sukanya Samriddhi Account.


National Small Savings Fund (NSSF)

It was established in 1999 within the Public Account of India for pooling the money from different SSSs. Collections from all small savings schemes are credited to the NSSF. Similarly, withdrawals under small savings schemes by the depositors are made out of this Fund.


The money in the account are used by the centre and states to finance their fiscal deficit. The balance in the Fund is invested in Central and State Government Securities.


Administration of Small Savings or NSSF

The NSSF is administered by the Government of India, Ministry of Finance under National Small Savings Fund Rules, 2001, which is derived from Article 283(1) of the Constitution.

Interest rate structure of Small Saving Schemes

Since April 2016, interest rates of all small saving schemes have been revised on a quarterly basis. The interest rate will be fixed on the basis of G-Sec yields of the previous three months.


There are some social development-oriented SSSs like- SukanyaSamriddhiYojana, the Senior Citizen Savings Scheme and the Monthly Income Scheme. Government is allowing a higher interest rate for these instruments over their corresponding maturity government securities.


Source-The Hindu.