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Revised Senior Citizens Savings Scheme (SCSS) Premature Withdrawal Rules

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  • Post published:November 21, 2023
  • Post category:General


New SCSS Premature Withdrawal Rules 2023

The landscape of financial planning for senior citizens witnessed a significant shift as the government introduced amendments to the Senior Citizens Savings Scheme (SCSS) premature withdrawal rules. The alterations, outlined in a recent Department of Post notification on November 7, 2023, bring about changes in withdrawal penalties, interest rates, and overall withdrawal procedures.

SCSS New Premature Withdrawal Rule:

Under the updated regulations, if an SCSS account is closed before the completion of the one-year investment period, a one percent penalty will be levied on the deposited amount. This marks a departure from the previous practice, where premature closure would result in the recovery of the interest from the deposit, with the remaining balance handed over to the account holder.

For deposits in one-year, two-year, and three-year accounts withdrawn prematurely after six months but before one year from the deposit date, the interest payable will now align with the rate applicable to the Post Office Savings Account for the completed months. Notably, the five-year tenure option has been removed from this category.

Change in Interest Rates for Premature Withdrawal:

The altered rules also introduce a modification in the interest rates for premature withdrawal, particularly for five-year accounts. Previously, if a five-year Time Deposit account was closed after four years from the date of deposit, the interest rate applicable for a three-year Time Deposit account would be used for interest calculation. The revised regulation now stipulates that if a deposit in a five-year account is withdrawn prematurely after four years, the interest will be payable at the rate applicable to the Post Office Savings Account.

Withdrawal of Five-Year Accounts:

In the earlier framework, premature withdrawal of a two-year, three-year, or five-year account after one year from the deposit date incurred interest payable for completed years and months. The interest rate was to be two percent points less than the rate specified for a one-year, two-year, or three-year deposit, with a quarterly compounding basis. The revised provision narrows down the scope, applying this rule only to two-year and three-year accounts withdrawn after one year from the deposit date. The interest calculation remains similar but is now linked to the rate specified for a one-year or two-year deposit, with quarterly compounding.

Other Provisions:

The revised regulations reinforce that no deposit can be withdrawn within the first six months from the date of deposit. Additionally, any interest already paid on the deposit under paragraph 7 will be recovered from the repayment amount, along with the interest payable under the new premature withdrawal rule.


The amendments to the SCSS premature withdrawal rules reflect a nuanced approach to safeguarding senior citizens’ interests while optimising the savings scheme’s efficiency. As investors navigate these changes, a clear understanding of the revised rules will be crucial for making informed financial decisions under the SCSS.


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