POSTAL SAVING SCHEMES - FAQ

POSTAL SAVING SCHEMES - FAQ

The following are frequently asked questions by the investors,

agents and others involved in mobilization of savings and answers

to these FAQs are as under:-

1.Why a person should invest in National Savings Products ?

Ans: The investment in NS Products which are the products of

Ministry of Finance, Government of India, has a sovereign

guarantee and therefore NS products are fully secured and safe.

The rate of interest offered on NS products are quite

attractive as compared to other schemes in the financial

market. The important aspect is that 100% of the collections

made in the state is invested in the securities floated by the

state govt. as a loan by the Govt. of India on long term basis

which is used by the state govt. for their developmental activities

in the state.

2. What products are under the fold of NSI ?

Ans : The Ministry of Finance, Govt. of India has structured 8

products to cater the needs of different segments of the

investors as given below. All the products are need

based and the investors can opt for the product as per their

requirement.

1) Senior Citizen’s Savings Scheme

2) Post Office Monthly Income Account

3) 15 Year Public Provident Fund Account

4) National Savings Certificate (VIII Issue)

5) 5-year Post Office Recurring Deposit Account

6) Post Office Time Deposit Account

7) Post Office Savings Account

8) Kisan Vikas Patra

3. Who formulates and introduces the schemes of National

Savings?

Ans. Ministry of Finance designs the product in consultation

with experts committees /National Savings Institute.

4. From where the investor can buy the National Savings

products?

Ans. All products are available at Post offices. PPF and

Senior Citizen Savings Scheme are also available with designated

Bank’s Branches.

5. Is post Office a member of clearing house to expedite Cheque

clearance as banks?

Ans. Yes. All the HPO/GPOs are the members of clearing house

for the purpose of Cheque clearance.

6. Is nomination facility available in National Savings Products?

Ans. Yes. The depositor can nominate one or more persons

as the nominee and also mention the share of nominee in case

of more than one nominee.

7. Whether NRI(s) can invest in the National Savings Products?

Ans. NRI(s) are not authorised to make investment in National

Savings Products.

8. What is the mode of payment on maturity / premature

closure of National Savings Products?

Ans: On Premature Closure or maturity, the deposits accepting

authorities make payment in cash upto Rs. 20,000/- and by

cheque in excess thereof.

9. Whether NS products enjoy the benefit of tax concession under

Income Tax Act ?

Ans : The deposit in PPF, N.S.C. VIII Issue enjoy the benefit

of tax concession under I.T.Act. The deposits in PPF qualify for

deduction upto maximum of Rs.70,000/- and deposits in NSC

VIII Issue upto Rs.1,00,000/- under Section 80 C of Income Tax

Act. The interest accrued in NSC VIII Issue for 5 years also

enjoy the benefit of Sec. 80 C of I.T.Act.

The interest on PPF and POSA is tax free as per the tax provisions

under Sec.10 of I.T. Act.

PRODUCTS BASED FAQs

P.O.S.A.

1. Whether Cheque facility is available in P.O.S.A.?

Ans: Yes. Cheque facility is available in Post Office Savings

Account like any other Bank.

2. Is there any maximum limit of deposit in the Post Office

Savings Account?

Ans: Yes. In single account maximum deposit limit is Rs. 1,00,000

and in joint account it is Rs. 2,00,000 only.

3. Can a minor open a P.O.S.A. ?

Ans: Yes. A minor who has attained the age of 10 years can

open POSA Account, More over a guardian can also open a account

in the name of minor.

4. Can a person open a single as well as joint account separately?

Ans: Yes. A person can open a single and/or joint account

separately even in the same post office.

P.O.R.D.

1. Can a Post Office Recurring Deposit Account (PORD) be

continued / extended beyond maturity period?

Ans: Yes, for a further period of 5 years by depositor at his

option with or without deposits.

2. Whether premature closure of the P.O.R.D. account is

permissible?

Ans: Yes. The holder of the account may prematurely close

the account after three years from the date of opening and

in such a case interest @ of Post Office Savings Account

shall be payable.

3. Is there any provision of interest on discontinued account

after maturity?

Ans: Yes. If maturity value of a discontinued account is retained

by a depositor after the date of maturity, post maturity

interest is allowed at P.O.S.A. rate as applicable from time to time.

4. Is there any social security benefit in PORD account?

Ans: Yes. All accounts upto maximum deposit Rs. 50/- P.M. are

eligible for social security benefit subject to certain terms and

conditions and maturity amount is paid to the nominee/legal

heir of the depositor.

Post Office Monthly Income Scheme

1. Can a depositor open more than one P.O.M.I.S. account?

Ans: Yes. A depositor may open more than one account subject

to the condition that deposits in all accounts taken together

shall not exceed the prescribed limit.

2. Can joint MIS account be opened by 3 persons?

Ans : A joint MIS account can be opened by 2 and 3 persons and

in such case, the share of the individual account holder will be ½

or 1/3 of the total deposits as the case may be. The maximum

amount that can be deposited in a joint account opened with

2 or 3 persons will however be Rs.9,00,000/- only.

3. Whether a depositor is entitled for bonus on MIS?

Ans : No bonus shall be paid on the deposits made in the POMIS

account opened on or after 13th Feb. 2006. However, bonus will

be paid on all the accounts already opened before 13th Feb.

2006, on their maturity.Government of India announced bonus

@ 5% on M.I.S.accounts opened on or after 8th December 2007.

4. Can a MIS account be prematurely closed?

Ans : A MIS account can be prematurely closed at any time

after the expiry of a period of one year from the date of opening

of such account subject to the condition that –

i) If the account is closed on or before expiry of 3 years of

opening of such account, an amount equal to 2% of the deposit

shall be deducted and remainder paid to him.

ii) If the account is closed after expiry of 3 years from the date of

opening of such account, an amount equal to 1% of the deposit

shall be deducted and remainder paid to the depositor.

KISAN VIKAS PATRA

1. Whether replacement of lost or destroyed K.V.P. is permissible?

Ans: Yes. The holder should apply for the issue of duplicate

certificate and comply with the prescribed procedure..

2. Whether the K.V.P. can be encashed through messenger?

Ans: Yes. If endorsement on the back of the certificate have been

signed already by the holder and accompanied by a letter of

authority containing specimen signature duly attested.

POST OFFICE TIME DEPOSIT ACCOUNT

1. Whether post maturity interest is paid on Time Deposit

Accounts or not?

Ans: Yes. In case payment of a deposit becomes due and the

same has not been made, interest shall be allowed on the amount

at the post office savings account rate for a maximum period

of two years only.

2. Whether Time Deposit Account can be pledged?

Ans: Yes. An application should be made in the prescribed form

by the transferors and transferee as per rules.

3. Can the interest of Time Deposit Account be credited to the Post

Office Savings Bank account standing in same post office?

Ans: Yes, on request in writing from the investor.

4. Can a POTD account be prematurely closed?

Ans: Yes. After six months. If premature closure is made after six

months but before 1 year, no interest will be payable. In

case the premature closer is after 1 year, the depositor will be

paid 2% less than the rate of interest applicable for the period of

deposit remaining with the Post Office.

5. Can a POTD account be prematurely closed ?

Ans : A POTD account can be closed prematurely after six

months but before one year without interest. A POTD account

for 2, 3, 5 years can be closed after one year and depositor

will get 2% less than the rate of interest specified for a deposit

of one year, two years, or three years as the case may be.

N.S.C. VIIIth Issue

1. Can Post Office issue certificate of annual interest in respect

of N.S.C.s (VIII issue) for purpose of filling of income tax returns?

Ans: Yes. Post office issues the certificate on demand by the

investors.

2. Can premature encashment be made in NSC VIII th issue?

Ans: No premature investment is allowed. However, the

premature encashment can be made only in three conditions i.e.

on death of the holder, on forfeiture by a pledgee & when

ordered by Court of Law.

PUBLIC PROVIDENT FUND ACCOUNT

1. Can PPF account be extended after 15 years and is there

any time limit?

Ans: Yes. The account can be extended for one or more blocks

of five years by giving option in form ‘H’ within one year from

the date of maturity of the account.

2. Whether the PPF Account can be continued without further

deposits after maturity?

Ans: Yes. The depositor can continue the account without deposits

after completion of maturity /extended block period.

3. Can a PPF account be opened by HUF ?

Ans : A PPF account is not allowed to be opened by HUF w.e.f.

13.5.2005. However, all the accounts which were opened

earlier will continue to earn interest till their maturity.

4. A PPF account where no subscription has been made in

a year is treated as discontinued?

Ans : A subscriber can deposit the minimum subscription of

Rs.500/- + default fee of Rs.50/- for each year of default subject

to the condition that the total deposit during the year in which

defaulted subscription is deposited should not exceed the

maximum deposit ceiling of Rs.70,000/- and it is not treated

as discontinued.

5. Whether a person is entitled for interest on the deposits

made in excess of the prescribed limit i.e. Rs.70,000/- in a PPF

account ?

Ans : Accountholder is not entitled for interest on any amount

deposited in excess of Rs.70,000/- in a financial year in the PPF

account.

6. If a person opens PPF account in the name of individual and

also in the name of a minor(s), how the limit of deposit is

determined?

Ans : The maximum amount of Rs.70,000/- can be deposited

by a person in a financial year in a PPF account opened in his

name and in the name(s) of a minor(s) taken together.

7. Whether the investment in N.S.C., KVP, POMIS, POTD

earns post maturity interest?

Ans : The post maturity interest on all the above schemes will

be paid up to maximum period of two years from the date of

maturity at the POSA rate applicable from time to time.

8. If the investment is made in NS products by cheque, what

is the date of deposit ?

Ans : In case of deposit by cheque in the NS products, except

PPF and R.D., the date of deposit will be the date of

realization of cheque. However, in the case of PPF and R.D.,

the date of deposit will be treated as date of presentation of

cheque.

SENIOR CITIZEN’S SAVINGS SCHEME

1. Can a joint account be opened with any person under

the Senior Citizen’s Savings Scheme?

Ans : The account can be opened jointly with the spouse only.

2. What should be the age of the spouse in the case of Joint.

Account?

Ans : In the case of Joint account, the age of first applicant /

depositor is the only factor to decide the eligibility to invest

under this scheme. There is no age bar/limit for the 2nd

applicant/joint holder (i.e. spouse).

3. What is the share of the joint account holder in the deposit

in SCSS ?

Ans : The share of the joint account holder under the

scheme is attributed to the first applicant/depositor only.

Question of any share of the 2nd applicant/ account

holder (spouse) therefore does not arise.

4. In case, the depositor does not close the account on maturity

and also not extend the account for a period of three years

within a period of one year, how the interest is to be calculated/

paid after the maturity period ?

Ans : The account shall be treated as matured and post maturity

interest at the rate applicable to the deposits under POSA from

time to time shall only be admissible for the period beyond

maturity in accordance with the rules. The amount of excess interest

paid (at higher rate applicable to deposits under SCSS) after the

maturity shall be deducted.

5. Whether TDS will be deducted on the interest paid on SCSS ?

Ans : The tax will be deducted at source in respect of interest

payable under SCSS. However, senior citizen can avail the

facility of furnishing the form no. 15-H under income tax rules

who is a resident in India and of the age of 65 years or more.

6. Can SCSS account be transferred from one deposit office to

other?

Ans : A depositor may apply enclosing the pass book thereto

for transfer of his account from one deposit office to another

provided that where deposit is Rs.1 lakh or above transfer fee

of Rs.5/- per lakh on deposit for the first transfer and Rs.10/-

per lakh of the deposit for the 2nd and subsequent transfers

shall be payable by the depositor.

7.What is the period up to which post maturity interest can be

given?

Ans : In case, the account is not closed on completion of the

five years, maturity period and also not extended under rule

4(3), post maturity interest at the POSA rate from time to

time shall be paid till the end of the month preceding

the month of closure. No time limit has been prescribed.

Agency System

1. Whether the services of National Savings Agent’s are

available to the investors?

Ans. Yes. Except in case of Post office savings Bank account.

However investors in their own interest should either tender

Cheque drawn in favour of the deposit accepting agency i.e.

post office or bank to the agents or obtain proper Agent’s

Receipt as a token of receipt from the agent.

2. How an individual can become agent of NSI ?

Ans: There are three types of agents operative in the

National Savings Agency system namely ,

1. Standardised Agency System(SAS)

2. Mahila Pradhan Agency System(MPKBY)

3. Public Provident Fund Agency System(PPF)

The work relating to appointment, renewal and servicing of the

agents has been transferred by Govt. of India to the respective

State Governments and in most of the cases District

Collector/Dy. Commissioner is the appointing authority in their

respective area of operation. The procedure regarding appointment

also varies from State to State depending on their requirements

of agents and any person interested to work as agent in National

Savings can approach the concerned District Magistrate

/ Dy. Collector/Director Small Savings of the respective state,

Regional Director, NSI, of the concerned area.

3. What is the procedure for payments of commission?

Ans: Agents under National Savings are paid commissions at

the rate of 1% in SAS and PPF agency system & 4% in MPKBY

Agency System which is applicable in case of ladies only

and they are authorized to

canvass only Recurring Deposit Scheme. The payment of

commission is made by the deposit accepting authorities

at source. However, in case of deposit canvassed under

Senior Citizen Savings Scheme, the commission is payable

only 0.5% to women/men agents working under SAS agency.

Sources: National Savings Institute

http://www.nsiindia.gov.in