Senior Citizens Savings Scheme - Extension or a New Account
-Rohit Kumar Parmar [1]
The Senior Citizen Savings Scheme (SrCSS) started in 2004, [2] offers a relatively higher rate of interest, compared to that offered by banks [3] on normal deposit schemes. However, there are some banks/ institutions that advertise, interest rates higher than that offered in the SrCSS. [4]
While there is a presumption that the entire amount deposited in the SrCSS is safe from uncertainties and risks, it is limited as per the statement/ disclaimer in the bank statements, as under :
`Each depositor is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) upto the maximum of ` 5 Lakh, for both principal and interest amount held by him in the same right and same capacity.’
The ceiling of ` 5 lakhs, includes the principal and interest on all deposits in the bank - savings, fixed, current, recurring, etc,. Some deposits, which are largely institutional deposits are excluded.
The banks where the DICGC insurance applies includes - all commercial banks, including branches of foreign banks functioning in India, local area banks, regional rural banks. However, DICGC does not cover Primary cooperative societies. [5]
The Senior Citizen Savings Scheme pays
i. quarterly interest to the depositors during its tenure of five years.
The deposit in the SrCSS is for five years. On maturity,
i. the deposited amount is paid back to the SrCSS depositor.
ii. The depositor has the option to extend the scheme by three years.
Even though not explicitly stated, the depositor also has the option to close the account after five years, and open a new account. The new account will be for five years. Having more than one SrCSS account is not barred.
Table below gives the rate of interest on deposits in SrCSS accounts, since inception.
Senior Citizens’ Savings Scheme Interest Rate Since Inception | |
YEAR | RATE OF INTEREST (%) |
02-08-2004 to 31-03-2012 | 9.00 |
01-04-2012 to 31-03-2013 | 9.30 |
01-04-2013 to 31-03-2015 | 9.20 |
01-04-2015 to 31-03-2016 | 9.30 |
01-04-2016 to 30-09-2016 | 8.60 |
01-10-2016 to 31-03-2017 | 8.50 |
01-04-2017 to 30-06-2017 | 8.40 |
01-07-2017 to 30-09-2018 | 8.30 |
01-10-2018 to 30-06-2019 | 8.70 |
01-07-2019 to 31-03-2020 | 8.60 |
01-04-2020 to 30-09-2022 | 7.40 |
01-10-2022 to 31-12-2022 | 7.60 |
01-01-2023 to 31-03-2023 | 8.00 |
01-04-2023 to 31.03.2025 | 8.20 |
Note : All disclaimers apply. The reader may like to verify the interest rates. Source : https://www.nsiindia.gov.in/(S(koivp445mewn1kuevud1u355))/InternalPage.aspx?Id_Pk=181 |
The above table provides a basis to take a decision on whether the SrCSS should be extended or a new account should be opened. The present rate of interest on SrCSS is 8.2 per cent, and is presently valid till March 31, 2025. Accordingly,
i. if the SrCSS account is paying less than 8.2 per cent, then the same should be closed and a new account should be opened.
This would cover SrCSS accounts opened between
a. April 1, 2020 and September 30, 2022, which pay 7.4 per cent,
b. October 1, 2022 and December 31, 2022, which pay 7.6 per cent, and
b. January 1, 2023 and March 31, 2023, which pay 8.0 per cent.
All the above rates of interest are less than 8.2 per cent, which rate is valid till March 31, 2025.
SrCSS account holders who are earning 8.2 per cent, however, can also consider opening a new account if they want to park their amount for a longer duration, which would then be five years. This can be done after closure of the maturing account only.
[1] Author, Freelance, Indian Economic Service, Senior Economic Adviser (Retired), Government of India, Ministry of Consumer Affairs, Food and Public Distribution and former Adviser (P 4) UNDP, Yemen has in posts
on his website (https://rohitkparmar.wixsite.com/site),
YouTube channel (https://youtube.com/@rohitkparmar),
X (formerly twitter) (https://twitter.com/rohitkparmar?s=09),
Facebook (https://www.facebook.com/rohit.parmar.5268750/),
been writing/ sharing varied topics and
can be reached at rohitkparmar@yahoo.com.
[3] A Senior Citizen Savings Scheme Account can also be opened in any Post Office.
[4] All disclaimers apply. This is for information only and the author is not advising the reader to consider any of them.
[5] All disclaimers apply. Details can be found in the website of RBI and DICGC, and at the link https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=272 .
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