The Mahila Samman Saving Certificate has been very instrumental in setting the stage for government-sponsored schemes to financially empower women. However, changes in the fiscal strategies and concerns related to collections from traditional savings schemes may dent the continuation of such a welfare savings instrument.
The government is reportedly considering to discontinue the ‘Mahila Samman Saving Certificate’ (MSSC) scheme after its current tenure ends in March 2025. According to some media reports, this potential move stems from a broader strategic shift as the government plans to reduce its reliance on traditional small saving schemes. It further anticipates a growing traction among people toward alternative investment options such as mutual funds and equities, the reports state.
The small saving schemes, namely, Mahila Samman Savings Certificate, Senior Citizens' Saving Scheme, and Sukanya Samriddhi Yojana have shown a robust performance in the past years. However, it is anticipated that the future inflows from such schemes could stabilise.
MSSC is a centre-sponsored savings scheme, created to financially empower women citizens of the country. The scheme offers a secure and attractive investment avenue, particularly for women coming from various socio-economic backgrounds.
Eligibility: The scheme comes with no specific age or income criteria - making it available to a wider women demographic. Guardians of younger girls may also take part on their behalf in this scheme.
Interest Rate: The scheme offers a fixed interest rate of 7.5 per cent per annum, which is comparatively much higher than many other savings instruments available in the market. The interest is compounded annually, providing a significant return over the investment period.
Maturity Period: An MSSC account comes with a two-year maturity timeline. Unless stated otherwise, the account holder will get the maturity amount two years following the account opening date.
Deposit Amount: The scheme allows a deposit to be made for as little as Rs 1,000 or as much as Rs 2 lakhs.
Partial Withdrawal: After a full year has passed after the account was opened the account holder is allowed to make a partial withdrawal from the MSSC account. The maximum amount that may be taken out of the account at once is 40 per cent of what has been invested (or has been accumulated in the account).
Reports show that there was a shortfall of Rs 20,000 crore in the National Small Savings Fund (NSSF) collections in the financial year 2024 (FY2024), which has set a low base for the current financial period. The government, given such trends, is aiming to reduce collections from the National Small Savings Fund (NSSF) FY2025.
The small savings estimate for FY25 is expected to shrink by around 11 per cent at Rs 4.20 lakh crore compared to Rs 4.71 lakh crore budgeted in FY24. The same is estimated for other better-performing small saving schemes like the Senior Citizen Savings Scheme expects inflows that collected Rs 1.12 lakh crore in FY24.
1. Interest Rate Risk: The Mahila Samman Savings Certificate, with a fixed coupon of 7.5 per cent for two years, could pose an interest risk for the government if rates start coming down. Therefore, the industry is projecting why the government may not extend the scheme when it ends in March 2025.
2. Shift in Saving Trends: The reports cite an ongoing shift in saving trends that may propel the government to put a pause (or hold) the MSSC scheme. As more individuals are moving towards higher-return investment options like mutual funds and equities, this trend has led to lower-than-expected collections under traditional savings schemes, the reports highlight.
3. Change in Fiscal Strategy: The Centre is aiming for a more transparent and accurate fiscal budget. According to an analysis by CNBC TV-18, with a lower small savings estimate, the government’s focus is shifting towards more sustainable borrowing strategies, rather than depending heavily on small savings collections.
The Mahila Samman Saving Certificate has been very instrumental in setting the stage for government-sponsored schemes to financially empower women. However, changes in the fiscal strategies and concerns related to collections from traditional savings schemes may dent the continuation of such a welfare savings instrument.