India Post offices will stop paying interest on Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts in cash With effect from April 1, 2022, as per its circular.
From April, 2022, the interest will only be credited in the account holder’s post office savings account or bank account.
In the cases where the account holder is not able to link his/her savings account with Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts accounts.
Then the outstanding interest should be paid only through credit in post office savings accounts or by cheque.
According to the Department of Post, some Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit account holders have not linked their savings account (Post Office savings account or bank account) for credit of their monthly/quarterly/yearly interest.
Further the circular states that “The interest due in these Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts are left unpaid in sundry office accounts. Further, it has been observed that many term account holders are not aware of annual interest payment of TD Accounts,”.
How Does This Help?
According to the circular, “better control over Post Office Savings Bank operations, promotion of digital transactions, prevention of money laundering activities and as a preventive measure to avoid frauds, the competent authority has decided for mandatory linking of either post office savings account or bank account for crediting of interest payment of Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts,”.
It is noteworthy here that the undrawn interest of Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts do not earn any interest.
However, if it gets credited in a savings account, it will earn additional interest.
Considering the benefits, the Post department has already urged Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts account holders to link their savings account for interest payment.
The savings account could be either a Post Office Savings Account or a Bank account.
Besides this, the depositors can also opt for the facility of automatic credit of interest amount from their Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts through Post Office Savings Account to recurring deposit accounts.
Linking Of Post Office Savings Account
For this, the account holder shall submit SB-83 Form (Application for availing facility of automatic transfer (Standing Instruction) for linking of Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts to his PO Savings Account along with his Senior Citizen Savings Scheme, Monthly Income Scheme and Term Deposit accounts passbook for such an endorsement, and his Post Office Savings Account passbook to the post office for the purpose of verifying authenticity.
For bank account linking, the account holder shall submit ECS-1 Form (ECS Mandate Form) along with a canceled cheque or copy of first page of the passbook of the Bank Account in which he desires to get the interest amount credited along with his MIS/SCSS/TD account passbook for such an endorsement at the post office concerned.