Punjab National Bank (PNB) on July 19, 2023 launched the Mahila Samman Savings Certificate (MSSC) scheme 2023. This is a small savings scheme that encourages women to save money and offers an attractive rate of interest of 7.5 per cent per annum.
The public sector bank became the fifth lender to offer the scheme after the government recently allowed all public sector banks and qualified private banks to participate in the scheme.
Which Other Banks Offer MSSC?
The government had launched the scheme on April 1, 2023, but until recently, it was only available through post offices. Later on June 27, 2003, the government authorised all public sector banks and qualified private sector banks to participate in the small savings scheme.
Punjab National Bank has now become the fifth bank to implement the scheme after Bank of India, Bank of Baroda, Union Bank of India, and Canara Bank.
What Is MSSC?
Only women can invest under this scheme, either for themselves or on behalf of a minor girl. The scheme is open till March 31, 2025.
Deposits made under the Mahila Samman Savings Certificate will fetch an attractive rate of interest of 7.5 per cent per annum, compounded quarterly, thus providing an effective rate of interest of approximately 7.7 per cent. Interest earned is taxable as per the income tax slabs.
The minimum investment required is Rs. 1,000, and maximum investment allowed is Rs. 2 lakh. Investing the maximum amount of Rs. 2 lakh for a two-year tenure with quarterly compounding interest would yield a total accrued amount of Rs. 2,32,044.
The maturity period for MSSC is two years from the date of deposit. However, account holders can withdraw up to 40 per cent of the eligible balance after the first year, before maturity, by submitting Form-3. Premature account closure is allowed only in special cases, such as the accountholder’s death, compassionate grounds like medical emergencies, or the guardian’s demise.
Comparing MSSC With Bank Deposits
As of July 20, 2023, several banks have discontinued special schemes for women depositors, but they offer deposit rates ranging from 7-7.25 per cent to all citizens, including women.
In comparison to the rates offered by MSSC, bank deposit rates are slightly lower. However, the higher tenure and investment limit offered by banks make the difference in rates less significant. Banks also provide greater liquidity, though premature withdrawals may incur penalties.
Also, on May 16, 2023 government announced that MSSC won’t deduct tax at source (TDS) on interest earned. The interest income will be added to a person’s total income which will get taxed in accordance with the recipient’s eligible tax slab. This makes MSSC suitable for individuals in the lower income groups who can leverage the scheme effectively.