National Savings Certificate: Government clarifies on premature closure of NSC account pledged in favour of banks
Government has issued clarification regarding premature closure of NSC account pledged in favour of banks. National Savings Certificates, also known as NSCs, are savings bonds that can be invested through the India Post's small savings schemes.According to the clarification dated March 27, 2023:
National Savings Certificate Scheme, 2019 provides that the account shall not be closed before maturity except in the following cases, namely: -
(a) on the death of the account holder in a single account, or any or all the account holders in a joint account;
b) on forfeiture by a pledgee being a Gazetted Officer, when the pledge is in conformity with this Scheme;
(c) when ordered by a court
The clarification was made to reply, “TamilNaducircleinLr.No.sB/I00-33l2020lDlgsdatedll.0l.2023requestedfor clarification and guidance on premature encashment ofNSCs on forfeiture by the Senior Manager, Bank of India which is also a nationalized bank. Hence, the matter was taken up with the Department of Economic Affairs, Ministry of Finance.”
NSC
NSC for this quarter offers interest rate of 7.0 % compounded annually but payable at maturity. If you invest Rs 1000/- grows to Rs 1403 ?after 5 years
Pledging of NSC account
NSC may be pledged or transferred as security by submitting the required application form, along with an acceptance letter from the pledgee, to the relevant Post Office.The following authorities can receive transfers and pledges.The President of India/Governor of the State.RBI/Scheduled Bank/Co-operative Society/Co-operative Bank.Corporation (public/private)/Govt. Company/Local Authority.Housing finance company.Transfer of NSC account from one person to another person
NSC may be transferred from one person to another person on the following conditions only.
(i) On the death of account holder to nominee/legal heirs.
(ii) On the death of account holder to joint holder(s).
(ii) On order by the court.
(iii) On pledging of account to the specified authority.
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This story originally appeared on: India Times - Author:Faqs of Insurances