Centre unlikely to extend Mahila Samman Savings Certificate scheme

Inflows into small savings schemes may level off

The Centre is unlikely to extend the Mahila Samman Savings Certificate scheme (MSSCS) that was made available for two years beyond its March 2025 deadline, according to official sources. 

Finance Minister Nirmala Sitharaman, in the Budget for FY24, had announced the scheme with an aim to encourage the habit of savings among Indian women.

The small savings scheme offers a fixed interest rate of 7.5 per cent with a partial withdrawal option.

In the first nine months of FY24, over 2.25 million accounts were opened under the MSSCS with a deposit of over Rs 14,500 crore.

India's strong performance in small savings scheme collections has been largely driven by two plans: the Mahila Samman Savings Certificate and the Senior Citizen Savings Scheme, with the government increasing the maximum deposit limit to Rs 30 lakh from Rs 15 lakh in the 2023-24 Budget for the latter.

An official noted that the inflows from these schemes may level off in the future.

Consequently, the Centre is expected to aim for lower collections from the National Small Savings Fund (NSSF) in FY25.

The Budget for FY25 has estimated savings collections of Rs 14.3 trillion and disbursements of Rs 10.4 trillion.

The overall collections for the current financial year, after including the opening balance, would be around Rs 45.9 trillion.

Last year, total receipts under the NSSF were Rs 42 trillion with disbursements of Rs 10.4 trillion. 

“Initially, there was a shortfall of Rs 20,000 crore in NSSF collections in FY24. So, we started with a low base. Second, we got a good flow from doubling of savings under the senior citizens’ scheme. Last year, it gave us a bonanza of Rs 1.12 trillion. But this will plateau. We are not expecting such a surge this time,” the official said.

Another reason for expecting lower collections from the NSSF is the shift among households towards equity markets and mutual funds, driven by attractive returns.

“We have consciously accepted this fall in NSSF collections, and kept market borrowings at the same level,” the official added.

While there are no upper limits to the number of accounts under the MSSCS, there is a cap on the maximum deposit limit. Additionally, there should be a gap of at least three months between opening of any two accounts. 

The scheme allows a deposit of a minimum of Rs 1,000 and above in the multiples of Rs 100 up to a maximum limit of Rs 200,000, after which no additional deposits are allowed. 

Small savings schemes are a list of 12 savings instruments, such as the National Savings Certificate, Public Provident Fund, and the Kisan Vikas Patra, among others.

Changing interest 
 

> 7.5% interest rate offered in the scheme with partial withdrawal option

> FY25 Budget estimates savings collections of ~14.3 trn 

> Households moving towards equity markets and mutual funds due to attractive returns

> Centre expected to aim for lower collections from the National Small Savings Fund in FY25