There are two term period options available in the National Savings Certificates (NSC). One is 5 years and the other is 10 years. Certificates under VIII issue mature in 5 years while the certificates under IX issue mature in 10 years.
Every investor goes through two thought processes each time an investment opportunity presents itself, one is about the immediate monetary requirement to invest in it and the other is about the financial gain when the investment matures. National Savings Certificates have been created with an intention to offer additional financial benefits to investors, supplementing their lifestyle. Investors can expect decent returns on maturity, with an option to further reinvest the amount, heralding a domino effect towards building a corpus of funds.
NSC Maturity Period
National Savings Certificates come with two term periods, one for 5 years and the other for 10 years. Investments in these certificates which come under the VIII issue mature after 5 years whereas those purchased under the IX issue mature after a period of 10 years. Investors can choose certificates with a term period which best suits their needs, with the VIII issue perfect for those looking at medium term returns and the IX issue suited for those who are not concerned about immediate returns and those who have the long term future in mind.
NSC Maturity Value
National Savings Certificates under the VIII issue (5 year term) earn an interest of 8.5% which is compounded half yearly whereas NSCs under the IX issue (10 year term) earn an interest of 8.8% which is compounded half yearly. This essentially means that an investment in this scheme is bound to multiply over time, with attractive incentives on maturity.
Mr. Kumar purchased National Savings Certificates worth Rs 10,000 from his post office. He purchased these certificates under the VIII issue, i.e. a 5 year term. Mr. Kumar is now eligible to earn an interest of 8.5% on these certificates. At the end of 5 years, on maturity, he stands to earn a total of Rs 15,162, a profit of close to 50% on his initial investment.
Similarly, Mr. Patel purchased National Savings Certificates worth RS 1 lakh on behalf of his minor daughter. These certificates were purchased under the IX issue with a maturity period of 10 years. His investment earns an interest of 8.8% half yearly. At the end of 10 years, Mr. Patel withdraws the amount on behalf of his daughter, which would stand at Rs 2.36 lakh, a profit of over 100% on his initial investment.
Mode of payment on maturity
On maturity, an investor could opt to encash his investment either in the form of hard cash or he/she could choose to have this amount transferred to a savings bank account held by that person. In the event of an individual failing to withdraw this amount on maturity, it would continue to earn the interest which is offered under post office savings account for a period of two years. Post this period, this amount will not earn any additional interest.
Documents required National Saving Certificate
An investor who wishes to encash his/her certificates on maturity would need to provide the following documents.
- Original National Savings Certificates
- Valid ID proof – This could be any government approved ID like passport, driving license, PAN card, etc.
- Duly filled encashment form
How to encash certificates on maturity
Individuals who wish to encash their certificates on maturity can do so by approaching the relevant post office where they purchased and registered their National Savings Certificates. They will have to fill up the NSC transfer form and submit it to the relevant authority. Individuals can also approach other post offices, subject to them filling in certain additional information about the certificates. In case of certificates which were purchased on behalf of minors, the initial purchaser should sign the certificate and get it attested by the legal guardian of the minor.
For certificates purchased directly by an investor, he/she is required to submit the form and sign the certificate after receiving the amount.