The Union Budget 2023 had announced a new small savings scheme exclusively for women. This was to encourage women investors to save. While it was earlier available only at post offices, it has recently been made available for subscription in all banks for enhanced reach to women. The scheme allows deposits under the name of a woman or girl child in single holder format. No joint account is allowed. Following are the brief features of the scheme:
Should you invest?
With interest rate at 7.5 per cent and quarterly compounding frequency, the effective rate comes to around 7.71 per cent p.a. for this woman scheme. 2- year bank FDs are offering interest rates of around 7 per cent p.a. Even the 2-year government bond annual yield comes to around 7 per cent. 2- year post office deposit annual rates are also recently revised to 7 per cent. So, the Mahila scheme offers a better rate for such a short span of 2 years. The only thing is the maximum investment is limited to Rs.2 lakh, which is low. So, the difference in the absolute interest income earned from bank FDs and the Mahila scheme is just about Rs.3,000 which is very small.
Nevertheless, if there is any funding requirement coming up after 2 years and you can afford to park money for that period, you can consider investing in this scheme. It is backed by government, so offers sovereign guarantee. Premature closure rules are however strict though, only offered in exceptional circumstances like death of the account holder, strict medical emergency, etc. Premature withdrawal rules state that you can withdraw a maximum up to 40 per cent of the eligible balance once after the expiry of one year from the date of account opening.
To conclude, consider your time horizon and liquidity requirements to invest in this product.