There are many types of savings schemes in the post office for small investors. Investors choose the right option for themselves from these schemes based on their savings. If you also invest in the post office savings scheme, then there is big news for you. The central government has announced through a notification that it will stop paying interest on National Savings Scheme (NSS) accounts from November 1st. The NSS interest rate for the period from March 1, 2003, to September 30, 2024, was 7.5% per annum. Depositors were advised to withdraw their money by September 30.
NSS-87 and NSS-92: A Brief History
NSS-87 was launched in 1987 and discontinued in 1992. A new series, NSS-92, was introduced in 1992 but was discontinued in 2002. Since then, no new NSS schemes have been launched.
NSS-87 allowed withdrawals once a year, but there was no withdrawal limit for NSS-92. It’s important to note that NSS is different from the National Savings Certificate (NSC), which remains unchanged.
What is NSS-87 and NSS-92?
NSS-87 and NSS-92 refer to two versions of the National Savings Scheme (NSS), which were small savings schemes launched by the Government of India to encourage savings among citizens.
- NSS-87 (1987-1992) allowed annual withdrawals with a limit on the amount.
- NSS-92 (1992-2002) had no withdrawal limit and offered similar benefits but was discontinued in 2002.
Both schemes were phased out, but existing accounts continued until recent changes that stopped interest payments from October 1, 2024. They are different from the National Savings Certificate (NSC).
Finance Ministry’s Notification
The Finance Ministry issued a circular on July 12 regarding multiple accounts in the Small Savings Scheme. The circular announced that from October 1, 2024, all accounts opened under NSS-87 and NSS-92 will earn zero interest. A gazette notification regarding this change was issued on August 29.
The Finance Ministry stated, “National Savings Scheme subscribers will not receive any interest on deposits made on or after October 1, 2024.” This change will affect those who view these schemes as a safe, long-term investment.
Potential Relief for Affected Investors
The government may consider offering a lump sum benefit for those transferring their funds to alternative schemes like the National Pension System (NPS) or Provident Fund. This could be similar to the one-time tax-free transfer allowed from Employees’ Provident Fund to NPS accounts under the Finance Act of 2016.