Everything You Need To Know About The Mahila Samman Savings Certificate

The government has introduced a new investment opportunity for women in the form of Mahila Samman Savings Certificate.

While the investment allows for a total of Rs 2 lakh for a period of two years earning 7.5% per annum for women including a minor girl child there are several small details that need the attention.

This will ensure that when a person is making an actual investment they are able to comply with the conditions and that the process is smooth.

The MSSC is available at both post offices as well as banks in the country.

This makes the actual process of investment easier as there are multiple places where the investor can go and make the investment.

Those who prefer to invest through their banks because of both convenience as well as comfort will find that all public sector banks as well as some private sector banks like ICICI Bank, Axis Bank, HDFC Bank and IDBI bank offer the scheme

There is an overall limit of Rs 2 lakh that can be invested in the MSSC but this need not be invested in a single lot.

This means that investors can invest in parts depending on the availability of money with them. Every investment is called an account under the scheme. The minimum investment is Rs 1,000 and then additional investments has to be in lots of Rs 100. There is no limit on the number of times one can invest as long as the overall limit of Rs 2 lakh is not breached.

However, there is one factor that can act as a restriction and this is very crucial because knowing it is important—There has to be a gap of at least three months between the investment in two accounts so this will act as a natural barrier to too many investments being made.

Accumulating money and then investing it in a few instalments can be a better strategy both in terms of management as well as actual completion of the investment if Rs 2 lakh is not present as a lumpsum.

The interest rate that is earned for the two year period on the scheme is 7.5% per annum. There are two factors here that will impact investors here.

One is that the interest is not paid out but keeps accumulating and it is only paid out at the time of maturity. This means that the certificate should not be considered as an option that can generate regular cash due to the nature of the payout.

The other thing is that in the calculation the interest is compounded each quarter and then this accumulates. This is a good thing as the benefit of keeping the money in the scheme is given to the investor in the form of higher returns as the compounding increases the yield for the investor.

The actual time period of the investment is two years so this has to be counted for every investment that has been made.

For example, if the first investment is made in April 2023 then this will mature after two years in April 2025 while a second instalment invested in October 2023 will mature in October 2025. However, there is an option to withdraw 40% of the balance in the account after one year from the date of opening so this can provide some needed liquidity.

There are specific conditions where the account can be prematurely closed before the completion of two years. One is on the death of the account holder the account can be closed. The second is in extreme conditions where there is some life threatening disease of the account holder or the death of the guardian for a minor. In this case the necessary documents will need to be first produced and then the account can be closed.

There is also another option to close the account after six months without giving any reason but it comes at a cost as the interest rate earned in such a situation will drop by 2 % to 5.5%.

Arnav Pandya is founder Moneyeduschool

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.