What changed
RBI issued clarifications on SCSS 2004 following queries from stakeholders. Key clarifications include a formula for broken-period interest, a ban on pledging deposits, and rules for premature withdrawal before one year. Multiple accounts are permitted for retirement benefits received in installments.
What it means for you
Banks must apply the specified interest formula for partial quarters and cannot offer loan facilities against SCSS accounts. Premature closure before one year is only possible with special approval, not for medical emergencies. This protects the scheme's purpose of regular income for seniors.
What you must do
- Update systems to calculate broken-period interest using (days × yearly rate) / 365 (or 366 for leap year).
- Inform branches that pledging SCSS accounts is not permitted.
- Advise staff that premature withdrawal before one year requires case-by-case approval, recommended by the relevant bank or postal authority.
- Allow multiple SCSS accounts for retirees receiving benefits in piecemeal, opened within one month of each receipt.
- Display the clarification notice on branch notice boards for agents and investors.
Who it affects
State Bank of India and associate banks, Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India, Designated branches handling SCSS accounts, SCSS investors and agents
How is interest calculated for a period less than a quarter under SCSS?
Interest for broken periods is calculated as: (number of days × yearly rate of interest) / 365, or 366 in a leap year.
Can I pledge my SCSS account to get a loan?
No, pledging SCSS accounts is not allowed because it would prevent subscribers from withdrawing periodic interest, defeating the scheme's purpose.
What if I need to withdraw money before one year for medical treatment?
Premature withdrawal before one year is not permitted for specific purposes like medical treatment. However, the Ministry may consider case-by-case requests for undue hardship, recommended by the relevant bank or postal authority.