TIME DEPOSIT - PREMATURE CLOSURE
(1). The premature withdrawal of a Time Deposit shall be allowed after expiry of six months from the date of opening of account. If account is closed between 6 months and 1 year, interest at the rate of Savings Account fixed from time to time shall be eligible.
(2). Premature withdrawal of a deposit after the expiry of one year in case of 2-year, 3-year and 5year account will be regulated as under.
(i) The rate of interest on such deposit shall be payable to the depositor for the completed years and months from the date of deposit to the date of closure and such interest shall be 1 percent less than the rate specified for a deposit of 1 year, 2 years or 3 years, as the case may be, in the concerned Table under Rule 7 of POTD Rules, 1981.
(3). With effect from the date of receipt of SB Order 13/2019 dated 18.12.2019, under the provisions of rule 8 of NSTD Scheme, 2019, the amount of deposit shall be repaid with interest as under:
(i). where a deposit in a one-year, two-year, three-year or five-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate applicable to Post Office Savings Account for the completed months
(ii). where a deposit in a two year, three-year or five-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and months, commencing on the date of deposit and ending with the date of withdrawal and such interest shall be calculated at the rate which shall be less by two (2) per cent. points than the rate specified for a deposit of one-year, two-year or three-year, as the case may be and interest for the completed year shall be calculated on quarterly compounding basis in accordance with the provisions of Rule 7 of NSTD Scheme 2019, and for any part of a year, interest shall be payable at the rate applicable for Post Office Savings Account.
(a) In respect of 5-year account, if the completed years and months exceed 3-years, the interest payable shall be two (2) per cent less than the rate specified for a deposit of 3-years (applicable on the date of opening of the account) from time to time.
(b) The amount of interest already paid on the deposit at the higher rate shall be set off against the principal and the interest payable under this/her rule and only the net balance shall be payable on such premature closure of the account.
(4). The premature withdrawal of Time Deposit can be allowed in the normal course on presentation of application for premature Closure of Account (SB-7B) by the depositor. No separate sanction for this purpose will be issued. The Head Post Offices and Departmental
Sub Post Offices will be competent to allow premature closure of a Time Deposit accounts as in the case of final closure of the account. Procedure laid down for closure of TD Account should be applied for premature closure also.
The impact of premature closure of each type of TD account is furnished here.
