Simple Interest On PPF, Sukanya Accounts: What Investors Need To Know

From October 1st, the Central Finance Ministry will implement a new system affecting investors with multiple accounts in high-interest savings schemes like the Public Provident Fund ( PPF ), Sukanya Samriddhi Account (SSA), and Mahila Samman Yojana . Under this system, if you hold more than one account, only one will continue to earn the maximum interest rate , while the others will revert to a simple interest rate .

This change is likely to disappoint many investors who have opened multiple accounts under these schemes, as it could lead to financial losses rather than gains. The Postal Department has issued guidelines in line with the Finance Ministry's instructions to ensure compliance with this new rule.

How the New System Works

According to Anil Kumar, the Chief General Manager of the Bihar Postal Circle, when an account is opened under any scheme, a Customer Identification File (CIF) is created for the account holder, containing all relevant information. If multiple accounts are linked to the same individual, they will be identified when the account holder’s Aadhaar number is added, either as they grow older or during the withdrawal process upon maturity. After identification, only the first account will continue to earn the original interest rate, while the others will earn simple interest.

Account Opening Restrictions

The government has also tightened the rules on who can open accounts. Only guardians who are direct blood relatives, such as parents, are now allowed to open these accounts. Previously, other relatives like maternal grandparents, uncles, aunts, and grandparents were also opening accounts. This change ensures that only the primary guardians, typically the parents, can manage these accounts.