Introduction: The Ministry of Finance, under the Department of Economic Affairs, has introduced a significant amendment to the National Savings Time Deposit Scheme, 2019. The new notification, G.S.R. 830(E), dated 7th November 2023, brings forth the National Savings Time Deposit (Fourth Amendment) Scheme, 2023. In this article, we will break down the key changes, specifically focusing on the conditions for premature closure and the revised interest rates.
1. Scheme Name and Commencement: The amended scheme is titled the “National Savings Time Deposit (Fourth Amendment) Scheme, 2023,” and it came into force on the date of its publication in the Official Gazette.
2. Premature Closure Conditions: The primary amendment in paragraph 8 introduces conditions for the premature closure of an account. The account holder can apply for premature closure using Form-4, subject to specific conditions:
(a) No deposit can be withdrawn before six months from the date of deposit.
(b) For premature withdrawal after six months but before one year (for one, two, or three-year accounts), interest is payable at the rate applicable to Post Office Savings Account for the completed months.
(c) For premature withdrawal after one year (for two or three-year accounts), interest is calculated at a reduced rate, two percent less than the rate specified for a one-year or two-year deposit, respectively. Interest is calculated on a quarterly compounding basis.
(d) For premature withdrawal after four years (for a five-year account), interest is payable at the rate applicable to Post Office Savings Account.
(e) Any interest already paid under paragraph 7 shall be recovered from the repayment amount, and the interest payable under this paragraph.
3. Impact on Interest Rates: The amendment outlines specific interest rate adjustments for premature closures, ensuring a structured and fair approach based on the duration of the deposit.
Conclusion: The National Savings Time Deposit Scheme Amendments 2023 aim to streamline the premature closure process and align interest rates with the duration of the deposit. Understanding these changes is crucial for account holders seeking flexibility in managing their investments. The Ministry of Finance continues to refine financial schemes, and individuals are encouraged to stay informed to make well-informed financial decisions. As the National Savings Time Deposit Scheme evolves, it remains a viable option for investors, and the recent amendments add an extra layer of clarity to the premature closure conditions and associated interest rates.
MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 7th November, 2023
G.S.R. 830(E). — In exercise of the powers conferred by section 3A of the Government Savings Promotion Act, 1873 (5 of 1873), the Central Government hereby makes the following Scheme to further amend the National Savings Time Deposit Scheme, 2019, namely:—
1. (1) This Scheme may be called the National Savings Time Deposit (Fourth Amendment) Scheme, 2023.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the National Savings Time Deposit Scheme, 2019, for paragraph 8, the following paragraph shall be substituted, namely:—
“8. 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 to 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 subparagraph (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.”.
[F. No. 1/4/2023-NS(Pt.)]
ASHISH VACHHANI, Addl. Secy.
Note :The Principal Scheme was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 922(E), dated the 12th December, 2019 and subsequently amended vide number G.S.R. 289(E), dated the 9th May, 2020, G.S.R. 838(E), dated the 22nd November, 2022, G.S.R. 53(E), dated the 27th January, 2023, G.S.R. 327(E), dated the 27th April, 2023 and G.S.R. 620(E), dated the 23rd August, 2023.
