Introduction: The financial landscape is ever-evolving, and government savings schemes play a pivotal role in providing individuals with secure and reliable investment options. SB Order No. 22/2023, dated 14.11.2023, issued by the Department of Posts, introduces critical amendments to key savings schemes in India. In this extensive analysis, we will delve into the intricacies of SB Order No. 22/2023, focusing on the amendments to the Senior Citizen’s Savings Scheme (SCSS), National Savings Time Deposit Scheme (TD), and Public Provident Fund Scheme (PPF).
Senior Citizen’s Savings Scheme (SCSS):
Investment Flexibility: The amendment allows individuals to make investments through retirement benefits within three months from the date of receiving these benefits. This provides retirees with a more flexible window to allocate their retirement funds into the SCSS, enhancing their financial planning options.
Spousal Inclusion: A significant change is the inclusion of spouses of retired Government employees aged fifty-five or more who died in harness. This amendment allows spouses to invest in the SCSS, irrespective of their age, provided they meet other specified conditions. This move promotes financial inclusivity for the families of retired individuals.
Extended Account: The amended rules permit the extension of the SCSS account for a block period of three years, irrespective of the number of times, until the depositor’s death. This extension option provides account holders with a more extended investment horizon, aligning with changing financial needs during the retirement phase.
Premature Closure: The extended SCSS account can now be closed prematurely before completion of one year, subject to a deduction of one percent of the deposit amount. While premature closure typically incurs penalties, this amendment provides a level of flexibility for account holders who may need to access their funds earlier.
National Savings Time Deposit Scheme (TD):
Premature Closure: The key change in the National Savings Time Deposit Scheme revolves around premature closure. A 5-Year TD account cannot be prematurely closed until completion of four years from the date of deposit. After four years, the interest payable will be at the rate applicable to the Post Office Savings Account scheme. This adjustment aims to encourage a more disciplined and long-term approach to TD investments.
Public Provident Fund Scheme (PPF):
Interest Rate on Closure: The amendment to the PPF Scheme addresses premature closure scenarios. On premature closure, the interest in the account will be allowed at a rate one percent lower than the rate credited in the account since the opening or the commencement of the current block period of five years. This change introduces a tiered interest rate structure, incentivizing account holders to adhere to the prescribed tenure.
General Changes:
Timely Implementation: Recognizing the dynamic nature of financial systems, the order emphasizes timely implementation of these changes. Until the necessary alterations are made in Finacle, post offices are instructed to comply with the provisions procedurally, ensuring a smooth transition without any violation of the amended rules.
Conclusion: SB Order No. 22/2023 represents a strategic effort by the Department of Posts to adapt savings schemes to the changing needs of investors. The amendments in SCSS, TD, and PPF schemes aim to enhance flexibility, inclusivity, and adherence to specific conditions. As post offices work towards implementing these changes, it becomes crucial for individuals to understand the nuances of these amendments and assess how they may impact their savings and investment strategies.
In essence, these amendments align with the evolving financial landscape, offering a more adaptable and accommodating framework for individuals seeking to optimize their savings through government-backed schemes. As these changes are implemented, it becomes imperative for both investors and financial institutions to stay abreast of the evolving landscape and make informed decisions for a secure financial future.
SB Order No. 22/2023
F. No 113-03/2017-SB(Pt.1)
Government of India
Ministry of Communications
Department of Posts
(Financial Services Division)
Dak Bhawan, New Delhi — 110001
Dated: 14.11.2023
To
All Head of Circles / Regions
Subject: Circulation of amendments in Senior Citizen’s Savings Scheme, 2023, National Savings Time Deposit Scheme, 2019 and Public Provident Fund Scheme, 2019— Reg.
Madam / Sir,
The undersigned is directed to forward the copy of the Gazette notifications dated 07.11.2023 (Published on 09.11.2023 at 22:46 Hrs) issued by Department of Economic Affairs, Ministry of Finance in connection with the amendments in rules related to National (Small) Savings Schemes.
(i) G. S.R.829(E) — Senior Citizen’s Savings (Fourth Amendment) Scheme, 2023.
(ii) G. S.R.830(E) — National Savings Time Deposit (Fourth Amendment) Scheme, 2023.
(iii) G.S.R.831(E) — Public Provident Fund (Amendment) Scheme, 2023.
2. The following amendments have been notified in the above said notifications.
(I). Amendments in Senior Citizens’ Savings Scheme, 2019.
(a). New rules inserted in Senior Citizens’ Savings Scheme, 2019.
| Sl. No. |
Rule No. after which new provision inserted |
New Provision |
| 1. | Rule 6 (1), clause (iii) | (iv) In case the account is closed before expiry of one year from the date of extension as mentioned in sub-paragraph (2), an amount equal to one per cent of the deposit shall be deducted and the balance shall be paid to the account holder. |
(b). Rules amended in Senior Citizens’ Savings Scheme, 2019.
|
Sl No. |
Rule No. | Existing Provision | Amended Provision |
| 1. | Rule 3 (1) clause (ii) and the proviso | who has attained the age of fifty five years or more but less than sixty years, and who has retired on superannuation or otherwise on the date of opening of an account under this Scheme, subject to the condition that the account is opened by such individual within one month of the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefit(s) along with a certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer, is attached with the application form:
Provided that the retired personnel of Defence Services (excluding Civilian Defence employees) shall be eligible to open an account under this Scheme on attaining the age of fifty years subject to the fulfilment of other specified conditions. |
who has attained the age of fifty five years or more but less than sixty years, and who has retired on superannuation or otherwise on the date of opening of an account under this Scheme, subject to the condition that the account is opened by such individual within three months from the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefits along with a certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits or admissible financial assistance to an eligible government employee who died in harness, I employment held and period of I such employment with the I employer, is attached with the I application form:
Provided that the retired personnel of Defence Services (excluding Civilian Defence employees) shall be eligible tp open an account under this Scheme on attaining the age of fifty years subject to the fulfilment of other specified conditions. Provided further that the spouse of the government employee shall be allowed to open an account under this Scheme, if the government employee who has attained the aqe of fifty years and has died in harness, subject to the fulfilment of other specified conditions. Explanation:- For the purposes of this proviso, the Government Employee includes all Central and State Government employees eligible for retirement benefit or death compensation.” |
| 2. | Explanation under Rule 4 | For the purposes of this sub- paragraph, “retirement benefits” means any payment due to the account holder on account of retirement on superannuation or otherwise and includes Provident Fund dues, retirement or superannuation gratuity, commuted value of pension, cash equivalent of leave, savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement, retirement- cum-withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary or a special voluntary retirement scheme. | For the purposes of this subparagraph, “retirement benefits” means any payment due to the account holder on account of retirement on superannuation or otherwise and includes Provident Fund dues, retirement or superannuation or death gratuity, commuted value of pension, cash equivalent of leave, savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement, retirement-cum withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary or a special voluntary retirement scheme and in case, if the employee died in harness, the “retirement benefits” shall also mean the above mentioned benefits to employee who died in harness.’. |
| 3. | Rule 5 (7) | In case of an account extended after maturity under subparagraph (l) of paragraph 8, the deposit in such account shall earn interest at the rate applicable to the Scheme on the date of maturity. | In case of an account extended after maturity under subparagraph (1) of paragraph 8, the deposit in such account shall earn interest at the rate applicable to the Scheme on the date of maturity or on the date of extended maturity. |
| 4. | Rule 7 (1) | The deposit made at the time of opening of the account shall be paid on or after the expiry of five years or after the expiry of eight years where account was extended under paragraph 8 from the date of the opening of the account, on an application in Form-3. | The deposit made at the time of opening of account shall be paid on or after the expiry of five years or after the expiry of each I block period of three years where account was extended under paragraph 8 from the date of opening of account, on an application made in Form-3:
Provided that after closure of the existing account or accounts, new account or accounts may be opened again as required by the depositor subject to the maximum deposit limit as mentioned in sub-paragraph (l) of paragraph 4. |
| 5. | Rule 7 (2) Second Proviso | Provided further that in case of a joint account, or where the spouse is the sole nominee, the spouse may continue the account on the same terms and conditions as specified under this Scheme, if the spouse meets eligibility conditions under the Scheme on the date of death of the account holder. | Provided further that in case of a joint account, or where the spouse is the sole nominee, the spouse may continue the account by applying to the accounts office, on the same terms and conditions as specified under this Scheme, if the spouse meets eligibility conditions under the Scheme on the date of death of the account holder. |
| 6. | Rule 8(1) | The account holder may extend the account for a further period of three years by making an application in Form-4 within a period of one year from the date of maturity. | The account holder may extend the account for a further block period of three years by making an application in Form-4 within a period of one year from the da{p of maturity or from the date of end of each block period of three years. |
| 7. | Rule 8 (2) | The extension of the account under sub-paragraph (1) shall be deemed to have been made from the date of maturity irrespective of the date of application. | The extension of the account under sub-paragraph (l) shall be deemed to have been made from the date of maturity or from the date of end of each block period of three years, irrespective of the date of application. |
| 8. | Rule 8 (3) | Extension of an account under sub-paragraph (l) shall be available only once. | Extension of an account under sub-paragraph (l) shall be available in block period of three years. |
(II). Amendments in National Savings Time Deposit Scheme, 2019
|
Sl. No |
Rule No. | Existing Provision | Amended Provision |
| 1. | Rule 8 | Premature closure of account – Premature closure of an account shall be allowed on an application by the account holder Form-4, subject to the conditions, namely:-
a) no deposit shall be withdrawn before the expiry of six months from the date of deposit; (b) where a deposit in a one-year, two-year, three-year or five-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate applicable to Post Office Savings Account for the completed months; (c) where a deposit in a two-year, three-year or five-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and months, commencing on the date of deposit and ending with the date of withdrawal, and such interest shall be calculated at the rate which shall be less by two per cent. points than the rate specified for a deposit of one year, two-year or three-year, as the case may be and interest for the completed year shall be calculated on quarterly. Compounding basis in accordance with the provisions of paragraph 7, and for any part of a year, interest shall be payable as per provision of sub- paragraph (b); Provided that if a five-year Time Deposit account is closed after four years from the date of deposit, rate admissible for three year Time Deposit account shall be applicable for calculation of interest under this paragraph; (d) any interest already paid on the deposit under paragraph 7 shall be recovered from the amount of repayment of deposit and the interest payable under this paragraph. |
Premature closure of account.- Premature closure of an account shall be allowed on an application by the account holder in Form-4, subject to the following conditions, namely:-
(a) no deposit shall be withdrawn before the expiry of six months from the date of deposit; (b) where a deposit in a one year, two-year or three-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate applicable ,{o Post Office Savings Account for the completed months; (c) where a deposit in a two-year or three-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and months, commencing on the date of deposit and ending with the date of withdrawal, and such interest shall be calculated at the rate which shall be less by two per cent points than the rate specified for a deposit of one year or two-year, as the case may be, and interest for the completed year shall be calculated on quarterly compounding basis in accordance with the provisions of paragraph 7, and for any part of a year, interest shall be payable as per the provisions of sub-paragraph (b); (d) Where a deposit in a five’- year account is withdrawn prematurely after four years from the date of opening of account, interest shall be payable at the rate applicable to Post Office Savings Account; and (e) any interest already paid on the deposit under paragraph 7 shall be recovered from the amount of repayment of deposit and the interest payable under this paragraph.”. |
(III). Amendments in Public Provident Fund Scheme, 2019
|
SI. |
Rule No. | Existing Provision | Amended Provision |
| 1. | Rule 13 in the second proviso | Provided further that on such closure, interest in the account shall be allowed at a rate which shall be lower by one per cent. than the rate at which interest has been credited in the account from time to time since the date of opening of the account, or the date of extension of the account, as the case may be. |
Provided further that on such premature closure, interest in the account shall be allowed at a rate which shall be lower by one per cent than the rate at which interest has been credited in the account from time to time since the date of opening of the account, or from the date of commencement of the current block period of five years, as the case may be. |
4. The following are the important changes in scheme features.
|
Scheme |
Features |
| Senior Citizens’ Savings Scheme | 1. Investments through retirement benefits can be made within three months from the date of retirement benefits.
2. Spouse of the retired Government employees whose age is fifty five years and died in harness, can invest in the scheme irrespective of age, subject to other conditions. 3. Extension of account can be done for block period of three years irrespective of number of times till the death of the depositor. 4. Extended account can be closed prematurely before one year subject to the deduction of oh of the deposit amount. |
| Time Deposit | 5-Year TD account cannot be prematurely closed till completion of four years from the date of deposit. In case of pre-mature closure of 5-year TD account after four years, interest shall be payable at the interest rate applicable to the Post Office Savings Account scheme. |
4. Necessary changes are being made in Finacle and till such time, the above provisions are to be complied by the post offices and handled procedurally, without any violation.
5. It is requested to circulate it to all concerned for information, guidance, and necessary actions.
6. This is issued with the approval of the Competent Authority.
Encl: As Above.
Yours faithfully,
(DEVENDER KUMAR SHARMA)
Assistant Director (SB-II)
Copy to: –
1. PPS to Secretary (Posts)
2. PS to Director General Postal Services.
3. PPS/ PS to Addl. DG (Co-ordination)/Member (Banking)/Member (0)/Member (P)/ Member (Planning & HRD)/Member (PLI)/Member (Tech)/AS & FA
4. Director General, APS, New Delhi
5. Chief General Manager, BD Directorate / Parcel Directorate / PLI Directorate
6. Deputy Director General (Vig) & CVO) / Sr. Deputy Director General (PAF)
7. Director, RAKNPA / GM, CEPT / Directors of all PTCs
8. Director General P & T (Audit), Civil Lines, New Delhi
9. Secretary, Postal Services Board / All Deputy Directors General
10. All General Managers (Finance) / Directors Postal Accounts / DDAP
11. The Under Secretary, MOF (DEA), NS-II Section, North Block, New Delhi.
12. The Joint Director & HOD, National Savings Institute, ICCW Building, 4 Deendayal Upadhyay Marg, New Delhi-110002
13. All recognized Federations / Unions / Associations
14. ADG (OL) for information and Hindi Translation of SB Order.
15. Guard File/e-File.
(DEVENDER KUMAR SHARMA)
Assistant Director (SB-II)
To Read More :
Senior Citizen’s Savings (Fourth Amendment) Scheme, 2023
National Savings Time Deposit (Fourth Amendment) Scheme, 2023
