National Savings Time Deposit Scheme 2019

The Ministry of Finance, Department of Economic Affairs, vide notification dated 12^th December 2019, has come up with the ‘National Savings Time Deposit Scheme, 2019’. The entire newly notified ‘National Savings Time Deposit Scheme, 2019’ is explained in the present article.

Groups of accounts under the Scheme

Following four types of time deposit accounts are grouped under the Scheme:

One-year account deposit can be made for a period of one year.
Two-year account deposit can be made for a period of two years.
Three-year account deposit can be made for a period of three years.
Five-year account deposit can be made for a period of five years.

Opening of an account under the Scheme

In order to open an account, the applicant is required to file an application in Form-1. The account can be opened in any of the following forms:

Single name a single adult name.
Joint name maximum up to three adults in joint name.
Minor name a minor can open an account only after attaining the age of ten years.
Guardian name a guardian can open an account on behalf of a minor or a person of unsound mind.

An individual can open more than one account in his name or jointly with others.

Deposit of an amount under the Scheme

The account holder is required to deposit a minimum of INR 1,000. However, there is no maximum deposit limit. Any sum in the multiples of INR 100 can be deposited under the Scheme.

Repayment of an amount under the Scheme

For receiving the amount, the account holder is required to file an application in Form-2 to the accounts office. The amount shall be repaid after the expiry of the period of one year; two years; three years or five years.

Extension of the tenure under the Scheme

The applicant is bestowed with an option to extend the tenure for the same period for which the account was initially opened. Say, for example, if the account is opened for a period of one year, the account holder would have the option to further extend the tenure for more one year. In order to exercise the extension option, the account holder is required to file an application in Form-3 within the period as tabulated below:

Group of account	Period (from the date of repayment) within which option for extension may be exercised
One year	6 months
Two year	12 months
Three year	18 months
Four year	18 months

It is important to note that, the account holder is allowed to exercise an extension option while opening the account. However, if required, the exercised extension option can be revoked by the account holder at any time before the date of repayment. Further, the account holder is allowed to extend the account only twice after the first repayment date.

Rate of Interest payable under the Scheme

A different group of accounts have a different rate of interest which are being summarised in the table below:

Group of account	Rate of Interest (per annum)
One year	6.9%
Two year	6.9%
Three year	6.9%
Four year	7.7%

Other provisions relating to interest:

Interest shall be calculated on a quarterly basis.
Interest shall be paid to the account holder at the end of each year. Please note the year shall be counted from the date on which the account is opened.
The rate of interest as applicable on the date of opening of an account shall apply till maturity.
No additional interest shall be paid/ payable on the interest amount that has become due for payment, however, not withdrawn by the account holder.

Premature closure of an account under the Scheme

The applicant is required to file an application in Form-4 for premature closure of an account. Below listed conditions are required to be satisfied for premature closure of an account under the Scheme:

The deposit can be withdrawn only after completion of six months from the date of deposit.
Interest payable on premature withdrawal is summarised hereunder:

Particulars	Rate of Interest
An account is prematurely closed after six months, but before the expiry of one year from the date of deposit	Interest shall be payable at the rate applicable to the post office savings account for the completed months.
An account is prematurely closed after expiry of one year from the date of deposit	Interest shall be payable at the rate less by 2% then normal interest rates for a deposit of one year; two years and three years, as prescribed above. Interest shall be payable for the completed years and months.

In case the five-year deposit account is closed after four years, then, rate admissible for three years deposit account (i.e. 6.9%) shall be applicable.

Pledging of an account under the Scheme

The account can be pledged/transferred as security. The applicant is required to file an application in Form-5 for pledging of an account. The applicant is also required to submit an acceptance letter from the pledgee. Transfer of an account can be made to the following:

The Reserve Bank of India (RBI) or the Scheduled Bank or a Co-operative Society (including co-operative banks).
The President of India.
The Governor of a State.
A public or private corporation.
A Government Company.
A local authority.
A Housing Finance Company (approved by the National Housing Bank and notified under Central Government communique).

Payment on death of the account holder

Provisions relating to the death of the holder and repayment of the deposit amount
- Death of the depositor of a single account the deposit amount shall be payable to the nominee or the legal heir.
- Death of all the depositors of the joint account the deposit amount shall be payable to the nominee or the legal heirs.
- Death of one or more of the depositors of the joint account the surviving depositors shall be treated as the owners of the account.
Provisions relating to the nominee:
- If there are two or more nominees, the deposit amount shall be payable in the proportion as specified by the depositor.
- If the proportion is not specified, the deposit amount shall be payable in the equal proportion.
- In case the nominee dies, the share of the deceased nominee shall be distributed amongst remaining nominee in the same proportion as per the specified shares.
- In case the nominee is minor, the deposit amount shall be paid to the person appointed by the depositor or the guardian of the minor.
Provisions relating to continuation or discontinuation of an account by the nominee:
- In case of three or less than three nominees, otherwise eligible to make a deposit under the Scheme can continue the account. Such nominee can receive the deposit amount along with interest as if the account was opened by the nominee themselves.
- If the nominee decides to discontinue the account, then, the account shall be closed, and the outstanding deposit amount shall be repaid to the nominee along with interest.