Post Office Savings Schemes (RD, NSC, MIS, SCSS)-Premature closure rules

Since our father’s age we are fond of Post Office Savings Schemes. Whatever we say about equity or any newly launched alternative investments, but we have more faith in Post Office or Bank FDs. But when it comes to premature closure of these schemes, only few have idea about the rules. Let us learn those rules today.

India Post   Financial Services

Instead of going through product features, in this post I only concentrate on premature rules of each Post Office Savings Schemes.

1) 5 Yr Post Office Recurring Deposit-

This is actually a five year product. Currently you are getting 8.4% compounding quarterly. But if you want to withdraw then you can do so only after 3 years. In case you try to liquidate it before maturity of 5 years the interest payable on such premature will be of Post Office Savings Account which is applicable from time to time.

But an extended account (Account which was extended after 5 years) can be closed at any time without any penalty.

One withdrawal of 50% of balance allowed only after one year completion.

2) National Savings Certificate-

Even though on Post Office site they claimed “If your certificate is issued on or after 1st November 2011 then no premature encashment will be possible.”, but when you check this link, it states that there is possibility of withdrawal only on special cases which are mentioned as below.

  • On death of holder or any holders in case of joint holding;
  • on forfeiture pledge by Gazetted Govt. Officer
  • When ordered by court of law.

In my view NSC is the only product which have less liquidity.

3) Post Office Monthly Income Scheme-

  • Before 3 years but after one year at the discount of 2% of the deposit.
  • After 3 years at the discount of 1% of deposit.

Here discount means deduction from the deposited amount.

4) Senior Citizen Savings Scheme-

  • After one year but before two years at discount of 1.5%.
  • After two years discount will be 1%.

Here discount means deduction from the deposited amount.

5) Post Office Time Deposits-

  • Withdrawal will be allowed only after 6 months.
  • If withdrawn after 6 months but before one year completion then simple interest applicable to post office savings account will be payable.
  • In case of deposit of 2,3 and 5 years of term deposit, if amount withdrawn after one year but before maturity then interest payable will be 1% lesser than the specified interest for the respective time deposits.

So there are the simple rules of premature withdrawal which you can use for liquidating any of your investments. Hope this information will be useful :)

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Comments

  1. deepak says

    Hi Basavaraj,

    Your website gives us very good explanation on various fincial plans and terms, I am planning to RD though SBI for < 2 year for 15K (@ 9% PA). Since the finacial budget is with in couple of days, Is it good time to open now. please suggest me

    Deepak

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