The Mahila Samman Savings Certificate for Women: All You Need to Know

During her Union Budget Speech 2023-24, Finance Minister, Ms Nirmala Sitharaman, introduced a new small savings scheme for women and girls, called the Mahila Samman Savings Certificate, to mark the Azadi ka Amrit Mahotsav. This scheme will be operational from April 2023 to March 2025 and will enable women and girls to deposit a maximum amount of Rs 2 lakh for two years at a fixed interest rate. This article elucidates all you need to know about the Mahila Samman Savings Certificate Scheme.

What is the Mahila Samman Savings Certificate?

The Mahila Samman Savings Certificate is a recently launched small saving scheme by the government. It is available for a two-year period from April 2023 to March 2025 and allows women and girls to deposit up to Rs 2 lakhs in the scheme that offers a fixed interest rate of 7.5% p.a. The scheme is designed to encourage women investors.

What are the key features of the Mahila Samman Savings Certificate?

1. Government-backed Scheme:

Since the Mahila Samman Savings Certificate scheme is a government-backed small savings scheme, it does not pose any credit risk.

2. Only for Women/Girls:

Only a woman or girl can open a Mahila Samman Savings account for herself, or a guardian can open it on behalf of a minor girl by filling out Form-I. Furthermore, only single-holder accounts are allowed under the scheme. Hence, you will not be able to open a joint account under this scheme.

3. Interest Rate:

The Mahila Samman Savings Certificate scheme will provide a fixed interest rate of 7.5% p.a., which is significantly higher than the interest rates offered by most bank Fixed Deposits (FDs) and other commonly used government-backed savings schemes, such as Sukanya Samriddhi Yojana, Senior Citizen Savings Program, Public Provident Fund, etc. Furthermore, the interest will be calculated quarterly and added to the account.

4. Deposit Limits:

Investments in the Mahila Samman Savings Certificate scheme can be made with a minimum of Rs 1,000, and any amount in multiples of Rs 100 can be deposited above this minimum investment limit. Moreover, no further deposits are permitted once the account has been created. The maximum investment limit allowed is Rs 2 lakhs in the scheme.

5. Maturity Proceedings:

After a period of two years from the deposit date, the deposit will reach maturity, and the investor can receive the balance by submitting Form-2. Any amount less than one rupee will be rounded up to the nearest whole rupee when determining the maturity value. For this calculation, amounts equal to or greater than fifty paise will be considered as one rupee, while anything below fifty paise will not be considered.

6. Premature Withdrawal:

Once the account has been open for one year but has not yet reached maturity, the account holder may withdraw up to 40% of the balance by applying with Form-3.

7. Tax Benefits:

The Mahila Samman Savings Certificate is a government-backed small savings plan that qualifies for tax benefits under Section 80C of the Income Tax Act, 1961. Small Savings Schemes, such as the Public Provident Fund (PPF), Senior Citizens Small Savings Scheme (SCSSS), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY) are investment vehicles that provide significant tax benefits to eligible individuals under Section 80C. However, the tax structure for the Mahila Samman Savings Certificate scheme has not yet been revealed.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds

How to invest in a Mahila Samman Savings Certificate?

Starting April 01, 2023, women and girls can invest in this scheme through state-owned banks or post offices. Here's how you can open an account under the Mahila Samman Savings Certificate:

1. To invest in the scheme, you need to get the Mahila Samman Bachat Patra Yojana form from the nearest bank or post office offering the scheme.

2. Complete the application form by providing personal, financial, and nomination details.

3. Present the duly signed form along with the necessary documentation, such as proof of identity and address.

4. Select the deposit amount and make the payment through cash or cheque.

5. Obtain the certificate, which will act as evidence of investing in the Mahila Samman Savings Certificate scheme.

What are the premature withdrawal rules of the Mahila Samman Savings Certificate?

The account cannot be closed before maturity except in certain circumstances:

1. If the account holder passes away.

2. If the account holder is facing extreme compassionate circumstances, such as life-threatening illnesses or the death of their guardian, which is determined by the post office or bank after thorough documentation and written permission are given.

3. If the account is closed prematurely, interest on the principal amount will be paid at the applicable rate of the scheme.

4. Premature closure is allowed after six months from account opening for any reason other than the ones listed above. However, in such cases, the balance will only be eligible for interest at a rate that is 2% lower than the specified rate in this scheme.

What are the charges under the Mahila Samman Savings Certificate?

The Mahila Samman Savings Certificate includes certain charges that you are responsible for paying, such as Rs 40 for physical mode receipt and Rs 9 for e-mode receipt. Additionally, payments will incur a charge of 6.5 paise per Rs 100 turnover.

Where can you apply for a Mahila Samman Saving Certificate?

1. Post Office:

The program has been running since April 1, 2023, under the Department of Post. Women investors who are interested can apply by submitting an account opening form, along with KYC documents (Aadhaar and PAN card), a KYC form for new account holders, and a Pay-in-Slip, along with the deposit amount or a cheque, at the nearest post office.

2. Bank of India:

Bank of India was the first public sector bank to introduce the Mahila Samman Savings Certificate. A press release from the bank proudly states that they are the first to implement this scheme across all of their branches.

3. Bank of Baroda:

Based on the Bank of Baroda's press release, the Mahila Samman Savings Certificate Schemes are accessible to both existing customers and non-customers. Any eligible woman has the option to open an account in her own name or on behalf of a minor girl with a guardian (who can be either female or male).

4. Canara Bank:

As per Canara Bank Tweet, "Canara Bank is proud to introduce the Mahila Samman Savings Certificate (MSSC) Scheme across India. As your trusted banking partner, we are committed to supporting women's financial growth and empowerment. Contact your nearest Canara Bank branch to learn more."

5. Union Bank of India:

On June 30, 2023, the Union Bank of India officially launched the Mahila Samman Saving Certificate (MSSC), 2023 Scheme in all its branches across India. As per information available on the Union Bank website, they have successfully collected Rs. 17.58 Crores in 5,653 MSSC beneficiary accounts up to that date.

Should you invest in the Mahila Samman Savings Certificate?

Investing in the Mahila Samman Savings Certificate offers a 7.5% interest rate with an effective interest rate of 7.71% for two years. It seems to be a more attractive option compared to other small saving schemes and certain bank FDs. Hence, the scheme is suitable for those women who are seeking to generate the highest returns in a short duration while ensuring the safety of the invested amount.

However, it does not make sense to break existing investments to invest in this scheme, as there is a reinvestment risk; at this moment, we don't know whether the scheme will be continued after 2025 and what interest rate would be offered at that time. Besides, Rs 2 lakh limit for this scheme is too low, making the difference in earnings almost negligible. Furthermore, unlike a regular Fixed Deposit, premature closure or withdrawal rules for this scheme appear to be stricter, which may discourage some people from investing in it.

Hence, it is advisable to invest in the Mahila Samman Savings Certificate only after carefully considering your short-term financial requirements. You may consider investing in it if you can invest Rs 2 lakh without breaking your existing investments and you are confident that you will not need this money for the next two years.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.