The government has set up a committee to undertake a comprehensive review of the small savings instruments in India such as public provident fund schemes and national savings certificate schemes. This marks the first steps towards migrating to a deregulated regime for such schemes. At present, interest rate on these schemes, which come with tax breaks, are administered by the government and are not linked to market rates.
The panel, to be headed by RBI Deputy Governor Shymala Gopinath, will review the structure of the National Small Savings Fund (NSSF) and give recommendations on making schemes flexible and market-linked.
The committee, suggested by the 13th Finance Commission, will also review the existing terms of loans extended by the NSSF to the Centre and states and recommend changes.
“The Thirteenth Finance Commission, in its report, has recommended that all aspects of the design and administration of the NSSF be examined with the aim of bringing transparency, market-linked rates and other much needed reforms to the scheme” a finance ministry statement said.