If you have National Savings Time Deposit Account(TD), then you should link your account with PO Savings or Bank account before March 31, 2022, as the government makes the linking mandatory effective from April 01, 2022. One of the major benefits of linking a TD account with a PO Savings or Bank account would be that the holder will earn additional interest on their savings.
The government made the decision after it was brought to notice that some TD accounts were not linked with PO Savings or Bank accounts for credit of their monthly, quarterly, half-yearly, or annual interest. Thereby, interest due on these TD accounts was left unpaid in the sundry office account. Also, the Centre observed that many TD accounts are not aware of the annual interest payment of TD Accounts. Not just that, many depositors are also not aware that undrawn interest shall not earn any interest.
By linking TD account with PO Savings or Bank Account, an account holder will earn additional interest on interest credited on such accounts, however, this is applicable only when interest is not withdrawn from TD accounts. Simply put, the guaranteed interest you earn on your TD account, is eligible for additional interest if they have not withdrawn your interest – but for this, the account needs to be linked with PO Savings or Bank accounts.
Also, by linking TD account with PO Savings or Bank account, depositors can withdraw due interest without visiting the post office and utilize the same through various electronic means. Further, filling up multiple withdrawal forms for accounts can be avoided; and the facility of automatic credit of interest amount from TD account through PO Savings account to RD Accounts is also available.
Other reasons to link TD accounts with PO Savings or Bank account is to have better control over POSB operations, promotion of digital transactions, prevention of money laundering activities, and as a preventive measure to avoid frauds.
In a statement, the Centre said, “the competent authority has decided for mandatory linking of either PO Savings Account or Bank Account for crediting of interest payment of MIS/SCSS/TD Accounts.”
Under the new guidelines, CEPT, Chennai is directed to provide a list of those active TD accounts not linked with a savings account (either PO Savings Account or Bank Account) to all the Circles and CPC (CBS). Further, the Circles should organize a special drive to link savings accounts with TD accounts for interest payment either by issuing a request letter or contacting those account holders.
Meanwhile, the account holders will have the option of getting interest from TD accounts credited into their Post Office Savings Account or Bank Account.
For linking TD account with PO Savings account, the account holder is required to submit SB-83 Form, whereas, for linking Bank account, a TD account holder should submit ECS-1 Form with a canceled cheque copy of the first page of the passbook of the bank account. Also, the account holder should submit their passbooks with these forms for such an endorsement at the post office concerned.
Furthermore, the Centre has advised India Post Payments Bank to devise a similar foolproof system to facilitate its customers avail interest credit from MIS/SCSS/TD accounts into their IPPB Savings Account, and inform the Department so that the same will be informed to all concerned.
“Interest on MIS/SCSS/TD accounts will be credited only in the account holder’s PO Savings Account or Bank Account with effect from April 01, 2022,” said the statement.
If failed to link TD account with PO Savings or Bank account before March 31, 2022, then interest is credited in TD sundry office accounts and the outstanding interest should be paid only through credit in PO Savings Account or by Cheque. That means interest payment in cash is not allowed from the TD sundry office account from April 01.
TD accounts is one of the post savings schemes of government with interest payable annually but calculated quarterly. The interest rate on the TD account varies from 5.5% to 6.7% depending upon the tenure. The account can be opened with a minimum of ₹1000 and in multiples of ₹100. There is no maximum limit for investment in this account. The deposit amount shall be repayable after the expiry of 1 year, 2 years, 3 years, 5 years (as the case may be) from the date of opening.
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