Mahila Samman scheme may not be extended beyond March 2025; key details

Announced during the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman, the small savings scheme aimed at encouraging savings among women

The Centre has no plans to extend the Mahila Samman Savings Certificate beyond March 2025, according to a Moneycontrol report citing a senior government official. The scheme, encouraging savings among Indian women, was announced in 2023 during the Budget presentation by Finance Minister Nirmala Sitharaman. It offers an annual interest rate of 7.5 per cent.

India's success with small savings schemes has been primarily driven by the Mahila Samman Savings Certificate and the Senior Citizen Savings Scheme, with the latter’s maximum deposit raised to Rs 30 lakh from Rs 15 lakh in the FY24 Budget, the report added.

The official noted that although schemes such as the Mahila Samman Savings Certificate, Senior Citizens' Saving Scheme, and Sukanya Samriddhi Yojana have shown strong performance, future inflows might level off. This has led the Centre to aim for lower collections from the National Small Savings Fund (NSSF) in FY25.

 

The Union Budget for FY25, presented in July, set the NSSF collection target at Rs 4.2 trillion, down from Rs 4.67 trillion in the Interim Budget.

Another reason for the anticipated lower NSSF collection is the shift of households towards equity markets and mutual funds, driven by attractive returns, the report claimed.

What is the Mahila Samman Scheme?

The Mahila Samman Savings Certificate (MSSC) is a small savings scheme introduced by the Government of India to empower women and encourage savings.

The scheme can be opened by any woman for herself or by a guardian on behalf of a minor girl. The minimum deposit is Rs 1,000, with additional deposits in multiples of Rs 100, up to a maximum of Rs 2,00,000 per account. The MSSC offers a fixed annual interest rate of 7.5 per cent, compounded quarterly.

The scheme matures two years from the date of account opening. Account holders can withdraw up to 40 per cent of the eligible balance after one year. Accounts can be opened at designated post offices and eligible banks until March 31, 2025.

Mahila Samman Scheme benefits

The Mahila Samman Savings Certificate aims to instil a savings habit among women, providing a secure investment option with attractive returns, the government says. As a government-backed scheme, it carries minimal risk, making it appealing for female investors seeking financial independence.

The MSSC offers a fixed annual interest rate of 7.5 per cent, compounded quarterly, aiding in building a secure investment over the two-year maturity period. Women can deposit a minimum of Rs 1,000, with increments of Rs 100, up to a maximum of Rs 2,00,000, allowing for flexible investment.

After one year, account holders can withdraw up to 40 per cent of the eligible balance, providing liquidity while encouraging savings. Although the interest earned is taxable, TDS is not deducted unless the interest exceeds Rs 40,000 in a financial year (or Rs 50,000 for senior citizens) under Section 194A.

The maturity amount is paid at the end of two years, giving account holders their savings plus accrued interest. The scheme specifically targets women and girls, promoting their financial independence and encouraging active participation in savings and investments.