Union finance minister Nirmala Sitharaman on Wednesday announced a new small savings scheme with a fixed interest rate and fixed tenure in a bid to encourage more savings among women and girls.

“For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility up to Rs 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option,” Sitharaman said at the Union budget.

At present only Sukanya Samriddhi Scheme allows opening of account of a girl child by a guardian with a maximum investment limit of Rs 1.5 lakh in a financial year and an interest rate of 7.6 per cent per annum.

The finance minister also announced changes to the Senior Citizens Savings Scheme (SCSS) doubling the maximum deposit limit under the scheme. “The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from Rs 15 lakh to Rs 30 lakh,” said Sitharaman.

Accounts under SCSS scheme can be opened by an individual above 60 years of age or retired civilian employees above 55 years subject to the condition that investment must be made within 1 month of receipt of retirement benefits. Retired defence employees above 50 years but below 60 years can also subscribe to SCSS subject to the condition that that investment must be made within one month of receipt of retirement benefits. SCSS has tenure of 5 years and offers interest rate of 8 per cent per annum.

While the investment limit has been doubled, the tax exemption of Rs 1.5 lakh available on SCSS investment under section 80C however remains unchanged.

“Increment of the limit of SCSS from Rs 15 lakh to Rs 30 lakh is an important announcement to help senior citizens and retired investors to plan their investments in safe instruments,” said Vivek Goel, joint managing director, Tailwind Financial Services.

The limit for monthly income account scheme has also been enhanced. “The maximum deposit limit for Monthly Income Account Scheme will be enhanced from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account,” Sitharaman said.

MIS account can be opened by a single individual or jointly up to 3 adults or a guardian on behalf of a minor. The investments are in multiple ofRs 1,000 and the scheme offersan interest rate of 7.1 per centper annum payable monthly.

MIS is one of the mostpopular small savings schemewith an outstanding amountof Rs 2,34,825 crore as of February 2022. SCSS had an outstanding of Rs 1,17,239 crore asof February 2022. Total smallsavings outstanding as of February 2022 was Rs 14,26737crore.

The FM also announced anintent to simplify the KYC process by adopting a risk basedinstead of a one size fits allapproach and said that the financial sector regulators willbe encouraged to have KYCsystem fully amenable to meetthe needs of “Digital India”.