Senior Citizen Savings Scheme (SCSS) has been found to be more appealing for senior citizens wanting to invest, firstly due to deposit safety as the scheme is managed by the Government of India, and secondly, because depositors will receive a higher return than traditional fixed deposits as the scheme will offer an interest rate of 7.4 percent per annum. But what if you, as a senior citizen, will be unable to earn interest starting next month?. Yes, you read it correctly: the Department of Posts, under the supervision of the Ministry of Communications, has made it mandatory for Post Office savings or bank accounts to be linked with the Senior Citizen Savings Scheme (SCSS) by March 31, 2022, in order to receive quarterly interest.
From April 1, 2022, interest earned on SCSS will be credited exclusively to accounts linked to PO Savings or bank accounts, according to the Ministry of Communications, Government of India. If your SCSS account isn't linked to a savings account, interest will be credited to your sundry office accounts.
Why linking of a savings account with SCSS has been made mandatory?
The government has made the announcement because some Post Office Monthly Income Scheme Account (MIS)/Senior Citizen Savings Scheme (SCSS)/Post Office Time Deposit Account (TD) account holders have not linked their savings account (either PO Savings Account or Bank account) for credit of their monthly/quarterly/yearly interest, and interest due in these MIS/SCSS/TD accounts has been left unpaid in sundry office accounts. Furthermore, many TD account customers are unaware that their accounts are subject to yearly interest payments. Furthermore, many MIS/SCSS/TD account depositors are unaware that undrawn money does not generate interest.
According to the Ministry, mandatory linking of either a PO Savings Account or a bank account for crediting of interest payments of MIS/SCSS/TD Accounts has been decided for better control over Post Office Savings Bank (POSB) operations, promotion of digital transactions, prevention of money laundering activities, and as a preventive measure to avoid frauds.
Benefits of linking a savings account with SCSS
- If interest is not withdrawn directly from SCSS accounts, interest credited to savings accounts will earn additional interest.
- Account-holders can withdraw their due interest without having to go to the post office and they can make use of post office internet banking or mobile banking services to get the same.
- It is able to stop having to fill out multiple withdrawal forms for each SCSS account.
- Depositors can have interest from their SCSS accounts automatically credited to their RD accounts through a PO Savings Account.
- With effect from April 2022, interest on SCSS accounts will be credited solely to the account holder's PO Savings Account or Bank Account.
- The PO Savings Account or Bank Account in which the depositor of SCSS Accounts wishes to receive interest payment can be either a single account type or a joint account type in which the depositor(s) of SCSS Accounts must be one of the depositors or guardians in the savings account.
How to link a post office savings account with SCSS?
In the case of a Post Office Savings Savings Account, the account holder must submit an SB-83 Form (Application for Automatic Transfer (Standing Instruction) for linking SCSS accounts to his or her PO Savings Account, as well as submit his or her SCSS accounts passbook for such approval and his Post Office Savings Account passbook to the post office for authentication. Following that, the post office in concern must follow the procedure outlined in rule 99(2) of the POSB CBS Manual. The SB-83 form must be included with the Account Opening Form (SB-AOF). On the last page of the SCSS passbook, make any necessary remarks with your signature and stamp before submitting it.
How to link a bank account with SCSS?
In the case of a bank account, he or she must submit an ECS-1 Form (ECS Mandate Form) along with a cancelled cheque or a copy of the first page of the bank account passbook in which the account holder wishes to have the interest amount credited, as well as submit his or her SCSS account passbook to the post office concerned for such an acknowledgment. Following that, the post office in concern must follow the procedure outlined in rule 99(3) of the POSB CBS Manual. The SB-83 form must be included with the Account Opening Form (SB-AOF). On the last page of the SCSS passbook, make the necessary remark with your signature and stamp.
If an account holder is unable to link his or her Savings Account with MIS/SCSS/TD accounts by 31.03.2022 and interest is credited to SCSS sundry office accounts, the outstanding interest shall be paid solely by credit in a PO Savings Account or by cheque, according to the Ministry of Communications.