Commissions on small savings undergo major changes

Payment of commission on PPF and Senior Citizens Savings Scheme to be discontinued; annual ceiling on investment under PPF increased from Rs 70,000 to Rs 1 lakh and liquidity on post office time deposits improved in a major restructuring of National Small Savings

The finance ministry has approved the Thirteenth Finance Commission recommendations to make NSSF more flexible and market linked so that investor earns better returns. Also, the ministry has made some major restructuring in the commissions paid to the agents. It will be effective following the issue of the notification from the government.

According to the decisions on the recommendations of the committee for comprehensive review of NSSF, payment of commission on Public Provident Fund (PPF) schemes (1%) and Senior Citizens Savings Scheme (0.5%) will be discontinued whereas agency commission under all other schemes will be reduced to 0.5% from existing 1%. However, commission at existing rate of 4% will continue for Mahila Pradhan Kshetriya Bachat Yojana agents. Also the incentives, if any, paid by the state/UT governments will be reduced from the commission paid by the central government.

Furthermore, the annual ceiling on investment under PPF will be increased from Rs. 70, 000 to Rs. 1 lakh and the interest on loans obtained from PPF will be increased to 2% p.a. from existing 1% p.a. while Kisan Vikas Patras will be discontinued. Liquidity on post office time deposits will be improved allowing pre-mature withdrawal at a rate of interest 1% less than the time deposits of comparable maturity. Pre-mature withdrawals between 6-12 months of investment, will be paid at the rate of interest applicable on post office savings account.

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