News | Fixed Income

Small Savings Scheme may get frozen if investors fail to submit their Aadhaar before deadline

MAS Team 07 September 2023
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Investors of popular small savings schemes such as the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and Post office deposits face a critical deadline. They must ensure their Aadhaar number is submitted to their respective post office or bank branch by the end of this month. Failure to meet this crucial deadline could result in the freezing of their small savings investments.
 
The imperative need for both PAN and Aadhaar numbers has been instated for investing in small savings schemes like PPF, SSY, Senior Citizens Saving Scheme (SCSS), among others. The Ministry of Finance instituted this requirement through a notification issued on 31 March 2023. 
 
As stipulated in the Finance Ministry's notification, small savings scheme subscribers must furnish their Aadhaar numbers by 30 September 2023, if they did not provide this information during the initial account setup for PPF, SSY, NSC, SCSS, or any other small savings account. In the absence of Aadhaar seeding, small savings accounts will get froxen six months after the account's opening. For existing subscribers, their accounts will meet the same fate starting from 1 October 2023, if they fail to adhere to the Aadhaar submission deadline.
 
Small savings schemes, highly regarded for their low volatility and government backing, serve as valuable investment avenues for individuals looking to accumulate wealth. Many of these schemes offer tax benefits, with some like the SCSS and PPF qualifying for deductions under Section 80C of the Income Tax Act, amounting to Rs1.5 Lakhs.
 
These schemes' interest rates undergo periodic reviews, with a notable 30 basis points (bps) increase announced for the July-September 2023 quarter. This revision specifically targeted 1-year and 2-year term deposits, along with 5-year recurring deposits, providing small savings scheme investors with more lucrative returns.
 
To ensure the continuity of their small savings investments, investors are urged to promptly fulfill the Aadhaar submission requirement, safeguarding their financial future and tax benefits.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
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What changes:
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Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder