Senior Citizens Savings Scheme (SCSS) premature withdrawal rules changed; check details

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The government has imposed new restrictions on early withdrawals from the Senior Citizen Savings Scheme (SCSS), according to a Department of Post notification issued on November 7, 2023.

SCSS: What is the new premature withdrawal rule?

If the account is closed before the one-year investment period expires, one percent of the deposit would be removed, according to the new rules. Previously, if the account was closed before the one-year period expired, the interest paid on the deposit was to be recovered from the deposit and the entire balance was to be paid to the account holder.

7 changes in Senior Citizens Savings Scheme rules: More people can invest, more time for retirees, stricter penalty

Earlier, where a deposit in a one-year, two-year, three-year or five-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate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.

Latest rule states, “where a deposit in a one year, two-year or three-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate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.”

The difference here is five year tenure has been removed.

Premature withdrawal: Change in interest rate

Earlier, Provided that if a five-year Time Deposit account is closed after ifour years from the date of ideposit, rate admissible for threeyear Time Deposit account shall be applicable for calculation of interest under this paragraph.Now, “Where a deposit in a five’- year account is withdrawn prematurely after four years from the date of opening of account, interest shall be payable at the rate applicable to Post Office Savings Account.”

Withdrawal of 5 year
Earlier, “where a deposit in a two-year, three-year or five-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and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 oneyear, two-year or three-year, as the case may be and interest for the completed year shall be calculated on quarterly compounding basis with the provisions of ‘7, and for any part of a interest shall be payable as provision of sub-paragraph.

Now, “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 oneyear 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.”

Other provisions

  • No deposit shall be withdrawn before the expiry of six months from the date of deposit.
  • 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.



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