Changes that would Matter you in New Financial Year

This financial year has come with some changes which would affect our personal financial in some way or the other. In this article we would like to highlight changes that are made in the interest that you get in your savings bank account, PPF account and also about PAN card regulation as far as  your deposits are concerned. Let’s discuss these changes one by one:

Saving Account would earn more interest

Not many of us would be aware that prior to this financial year, we were getting less interest on balance in savings bank account as against what was publicized 3.5 % per annum. The bank used to pay us  interest on the minimum balance kept in our account between 11th and last day of the month. Thanks to the method of calculation, it was truly unfair on us and cost us huge amount of interest loss.  Assuming, you have deposited Rs. 2 lacs on 12th day of any month and from 1st to 11th the balance was only Rs. 5000/-. Banker would take Rs. 5000 as the lowest balance during that month and credit your account with Rs. 14.58. But starting this financial year, the banker would pay you same 3.5 % but this would be calculated based on daily closing balance.Taking the above example, if your 2 lacs continues to remain in bank  till the end of the month, you would be getting Rs. 378.76/-. Quite a substantial gain, but do remember, the savings bank rate of interest is much below the inflation rate, so you should keep only that much amount in savings bank account, which you would require for your immediate needs only.

The impact would be that the banks cost of funds shall go up. Each bank has to pay more there by bringing the NII (Net Interest Income) of the bank a bit low. Worst hit would be the banks with more number of salary accounts in there deposits. But over all the investor are the winner of this regulation.

Also Read:

Non quoting of PAN would, would attract TDS at higher rate

From April 1, 2010 if PAN (Permanent Account Number) is not quoted at the time of transaction the deductor shall deduct TDS at the rate of 20 percent as against the normal TDS rates of 2 percent to 10 percent.

This means that if you not have a PAN or fail to produce the PAN number the TDS rate would be higher. This is as per section 206AA introduction in Financial Act (No 2)2009. This would particularly impact people having low income and who do not fill income tax return. Also senior citizens with low income need to obtain a PAN number as banks would cut TDS at higher rate than the prescribed on their fixed deposits. Remember that this shall be done even if a senior citizen provides from 15 G or 15H. Also NRIs(Non Residential Indians) need to take care that in case they are expecting an income, they need to obtain the PAN number and provide it to the deductor and also this would be required for claiming the TDS from the IT department.

Considering the fact only 8 crore PAN cards have been issued till date, the tax base is just 3.3 crore, on account of massive under reporting and claiming of exemptions. the income tax department wants to check the tax evasion. Over all there are two ways to increase tax collection. One is to impose more tax and other is to widen the base or number of people who would pay tax. The exchequer is working on the second method.

Changes in PPF account

Earlier your date of deposit of cheque was treated as Deposit in PPF but now of realization of cheque shall be treated as deposit date. So just make sure that your cheque is cleared before 5th date of  the month, so that you will get the full month’s interest and do not wait for 31st march depositing your cheque.

Also you can now open a PPF account in the name of minor child also, which was earlier not allowed by some agency banks.

The Indian financial systems are one of the best in the world and there are case studies taught in international MBA institute on our financial and banking system. Just one more reason which makes us proud to be an Indian!

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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.


  1. Nice article.

    Can you explain the last part about PPF.
    U said that “so just make sure that your cheque is cleared before 5th date of the month, so that you will get the full month’s interest ”
    I do have PPF account but I dont know this funda. how does deposit before 5th of each month is benificial ?

    please advice


    • Amol

      Hope you got ur answer from Manish, If still you feel more clarification is required please let us know.

  2. Amol

    Interest in PPF is calculated on the balance per month on 5th . So suppose you have 50,000 in your account , then interest will be calculated on 5th of month , which will be on Rs 50,000 , now suppose you invest more money on 10th , then it will be counted in next month , better invest before 5th only so that its counted for interest calculation .


  3. With reference to your above statement that a PPF account can be open in the minors name, I am seeking clarification. I have been given an understanding as per the RBI rules, accounts opened in the name of a minor after 13.05.2005 shall be treated as viod ab anitio and immediate action should be taken to close such accounts and to refund the deposits without any interest to the depositors.

    • @ Hitesh

      Extracts from

      Circular No. DGBA.CDD. H-7530/15.02.001/2009-10, Dated 29-3-2010

      “Opening of an account for a minor:

      (a) In view of complaints being received about non-opening of accounts for minor by some Agency banks, it is reiterated that as per Rule 3 (1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88/-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/her minor child but not both.

      (b) You are advised to reiterate these instructions to your branches operating the PPF Scheme.”

      Hope this clarifies your query.

      Keep visiting TFL.

  4. I tried to open a PPF account for my minor child-but the bank(State Bank of India) is straightaway refusing to open it inspite of quoting all the above mentioned detals.Is there any ombundsman regarding this issue

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