If you are a small savings account holder, including Public Provident Fund (PPF), National Savings Certificates (NSC), and others, it is crucial to link your Aadhaar number with these accounts by September 30, 2023. Failure to do so will result in these accounts being frozen.
The Union Ministry announcement on Small Savings Schemes: The Ministry of Communications issued a crucial announcement on March 31, 2023, mandating the use of Aadhaar for investments in small saving schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), or Senior Citizens Savings Scheme (SCSS)—people who have already invested need to give their Aadhaar numbers.
Also, individuals shall submit the Aadhar number and PAN for the purpose of opening an account under any of the schemes in the Government Savings Promotion Act, when certain conditions are satisfied.
Divakar Vijayasarathy, Founder, CEO, DVS Advisors. said, "In the event of the failure of submission of Aadhaar within the specified period of 6 months, the account shall cease to be operational till the time of submission. Schemes covered by the afore-mentioned Act are PPF, NSC, Post office Time deposits, Sukhanya Samriddhi, SCSS, KVP, Post office monthly income scheme, etc."
Aadhar is to be submitted when-: (i) a depositor has opened an account without submission, within a period of 6 months from April 1, 2023, ie., September 30, 2023 (ii) Aadhar has not yet been assigned, he shall furnish proof of application for Aadhar at the time of opening an account, and the account holder shall furnish the Aadhar within 6 months from the date of opening of account for the purpose of linking.
Amit Gupta, Managing Director at SAG Infotech, said, “If someone has an account but hasn't given their Aadhaar number yet, they must do so within six months starting April 1, 2023. This six-month period mentioned in the notice ends on September 30. Therefore, assuming that prior participation shields you from any issues is a misconception. To safeguard your savings account from potential freezing, it's essential to submit your Aadhaar number before the deadline.”
The Government of India is instituting this directive to ensure transparency in fiscal transactions and curb illegal activities. Aadhaar, a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI), is considered instrumental in this regard. It acts as a key identifier, offering an individual’s exhaustive demographic and biometric details, thereby reducing the chances of fraudulent transactions and money laundering. It is notably an essential cog in the government’s bid to digitalise the Indian economy.
Under the new rules, all account holders, including the beneficiaries of Post Office Schemes, Kisan Vikas Patra, and Senior Citizen Savings Schemes, will have to provide their Aadhaar number and mention it in their respective account details. This rule applies irrespective of whether the account has been established at a bank or a post office. Concerned authorities have jurisdiction over deactivating accounts that stand non-compliant beyond the stipulated deadline.
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Why your PPF, NSC, or SCSS account may be frozen: Your small savings account, be it PPF, NSC or SCSS, may face freezing if you do not submit your Aadhaar number to the bank or post office branch by the critical deadline of September 30, 2023. "The Aadhaar card serves as a vital document for investing in these schemes, and its absence could hinder their benefits. The bank or post office reserves the right to freeze your savings account until you provide your Aadhaar number within the stipulated timeframe," says Gupta.
If your Aadhaar isn’t linked to your account by the predetermined date, your account will be rendered inoperable. In addition, you will not be eligible for any of the facilities associated with these small savings schemes until the linkage issue is resolved. The failure to link Aadhaar will directly impact access to facilities like loans against these savings schemes, premature withdrawal, and lending.
How to link your Aadhaar: Account holders have several ways to link their Aadhaar numbers with their accounts. They can visit their respective bank or post office, bring their Aadhaar card and passbook, and request the linkage from an authorized official. Alternatively, several banks offer online methods for linking Aadhaar and accounts. Account holders can log into their respective bank's online banking portal, navigate to the option for Aadhaar linkage, input their Aadhaar number, and follow the prompts to complete the linkage.
Consequences of a frozen savings account: The repercussions of a frozen savings account can be dire:
1) Interest that is due will not be credited to your bank account. 2) Deposits into your savings accounts, including schemes like PPF and NSC, may be restricted. 3) Accessing the maturity amount of your scheme using the same account details may become impossible.
Gupta said, “While PAN is undoubtedly an important document, investors have a bit more flexibility regarding its submission. PAN details can be provided in the following events:
If the account balance exceeds Rs 50,000. If the total credits in the savings account within a financial year exceed Rs 1 lakh. If the total transfers or withdrawals from the account within a month surpass Rs 10,000.”
Timely compliance will keep your investments secure and enable you to enjoy the benefits of these valuable savings schemes.
Remember, linking your Aadhaar with your savings schemes is a regulatory requirement and a significant step towards ensuring your financial security. It ensures the authenticity of these accounts, reduces the risk of fraud, and strengthens the government's efforts to curb black money.
Hence, all small savings scheme account holders must act promptly and link their Aadhaar to their accounts before the September 30, 2023, deadline to continue enjoying the associated benefits and avoid inconvenience.