As per the guidelines from the Reserve Bank of India (RBI), the Senior Citizen Saving Schemes Interest Rates should be reviewed every quarter. Furthermore, it should be noted that the interest earned from this scheme is taxable.
Life after retirement is often referred to as the golden period. This is the ideal time to relax, unwind and enjoy; free of any worries and work-stress. Financial savings ensure a secure future and also form a crucial part of one’s existence. SCSS (Senior Citizen Savings Scheme) gives people the freedom of continuing to save while ensuring guaranteed returns through safe investment. As per the regulations of Government of India Senior Citizen Savings Scheme should be made available to customers through all branches of Public Sector Banks which are operating PPF Scheme, 1968.
Interest rates of the Senior Citizens Savings Scheme reduced by 80 bps
For the first quarter of FY 2020-2021, the government decreased the interest rates of small savings schemes between 70 and 140 basis points. The interest rates of the Senior Citizens Savings Scheme have been reduced by 80 bps. Therefore, the interest rate has been reduced from 8.6% to 7.4%. The interest is calculated and paid on a quarterly basis. Individuals above the age of 60 years can invest in the scheme. The maximum amount that can be invested in the scheme is Rs.15 lakh. Individuals can open an account at post offices and authorised banks. Apart from being easy to open, tax benefits are also provided for investments made towards the scheme. The decision to reduce the interest rates comes after the RBI cut its key interest rate by 75 bps. The government revises the interest rates of the Senior Citizens Savings Scheme every quarter.
SCSS Interest Rates
|Financial Year||Rate of interest p.a. (%)|
|April to June (Q1 FY 2020-21)||7.4|
|Jan to March (Q4 FY 2019-20)||8.6|
|Oct to Dec 2019 (Q3 FY 2019-20)||8.6|
|Jul to Sep 2019 (Q2 FY 2019-20)||8.6|
|Apr to Jun 2019 (Q1 FY 2019-20)||8.7|
|Jan to March 2019 (Q4 FY 2018-19)||8.7|
|Oct to Dec 2018 (Q3 FY 2018-19)||8.7|
|Jul to Sep 2018 (Q2 FY 2018-19)||8.3|
|Apr to Jun 2018 (Q1 FY 2018-19)||8.3|
|Jan to March 2018 (Q4 FY 2017-18)||8.3|
|Oct to Dec 2017 (Q3 FY 2017-18)||8.3|
|Jul to Sep 2017 (Q2 FY 2017-18)||8.3|
|Apr to Jun 2017 (Q1 FY 2017-18)||8.4|
- The Senior Citizen Saving Scheme interest rates, in accordance with RBI directives, is 7.4% per annum, and is computed quarterly.
- This is payable from the date of deposit of 31st March/30th Sept/31st December in the first go and after this, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December (as per post offices).
- Applicant needs to be at least 60 years old or above on the date of opening of an account.
- A joint account can be opened with the depositor’s spouse only. The first depositor in joint account has to be the primary investor.
- Applicant can also be 55 years old or more, but less than 60 years old. He/she needs to have retired on superannuation or otherwise on the date of opening an account.
- Interest amount can be drawn through auto credit into savings account.
- In case the depositor does not close or extend the account on maturity, his/her account will be treated as matured. In this case the depositor will be enjoy interest rate applicable to the deposit under post office savings account (during the post maturity period).
- Any retired personnel of Defence Services (excluding civilian Defence employees) are eligible to open this account irrespective of the aforementioned age limit. But they must fulfil the other specified conditions.
- NRIs and HUFs cannot open this type of account.
- The deposit amount should be in multiple of one thousand rupees.
- The depositor also needs an age proof to open the scheme.
- One single depositor has the freedom to hold more than one account of this scheme. But this is subject to the condition that deposits in all the accounts, added together should not exceed a limit of Rs. 15 lakhs.
- The maturity period is 5 years.
- After a maturity period of 5 years, the depositor may extend the account for a further period of 3 years. In this case, an application from should be made within a period of one year (after the date of maturity period).
- If there is only one deposit in the account, then it needs to be in the multiple of one thousand rupees and cannot exceed rupees fifteen lakhs.
- Withdrawals are not permitted before the expiry of a period of five years from the date of opening of an account.
- If the deposit amount is less than a lakh, then it can be deposited in cash.
- The depositor has the freedom to choose one or more people as nominee/nominees, at the time of opening of the account. This can also be done any time after the opening the account. The procedure to carry it out is by an application on Form C accompanied by the passbook to the nearest Corporation Bank branch. The depositor can also cancel or change the course of the account, before expiry.
- To make a payment by cheque or demand draft, then draw it in favour of the depositor, and it should be endorsed in favour of the deposit office.
- At CBS post offices quarterly interest of SCSS accounts can be credited in any savings account standing at any other CBS post offices.
- At post offices premature closure of the SCSS is allowed after one year. This is allowed only on deduction of an amount which is equivalent to 1.5% of the deposit amount. And this is after 2 years 1% of the deposit.