SB Order No. 03/2023 – NSC Account Closure PDF

The Department of Posts under the Ministry of Communications has provided an explanation regarding the closure of National Savings Certificate (NSC) accounts that are pledged to banks. According to Rule 7(1) of the National Savings Certificate Scheme, premature closure of the account is permitted in cases such as the death of the account holder(s), forfeiture by a pledgee who is a Gazetted Officer, or a court order.

The Ministry of Finance’s Department of Economic Affairs has confirmed that the premature closure of the account is allowed under paragraph 7(1) of the scheme, subject to certain conditions. This clarification was given in response to a request for guidance from the Senior Manager of Bank of India on the early encashment of NSCs due to forfeiture. The circular has been disseminated to all head of circles/regions for information and necessary action.

Premature closure of NSC account pledged in favor’s of banks

SB Order No. 03/2023

No. FS-10/17/2020-FS
Government of India
Ministry of Communications
Department of Posts
(F.S. Division)

Dak Bhawan, New Delhi – 110001
Dated: 27.03.2023

To,
All Head of Circles / Regions

Subject: Clarification on premature closure of NSC account pledged in favour of banks – Regarding.

Rule 7(1) of 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.

• Tamil Nadu Circle in Lr. No. SB/100-33/2020/Dlgs dated 11.01.2023 requested for clarification and guidance on premature encashment of NSCs 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.

3. In response, Department of Economic Affairs, Ministry of Finance in OM No. 14/3/2018-NS dated 20.03.2023 informed that the premature closure of the account is permissible under Paragraph 7(1) of National Savings Scheme. 2019 and can be done under this paragraph by following the prescribed conditions. A copy of the DEA, MoF’s OM is attached for reference.
4. This may be circulated to all the Offices for information and necessary actions.
5. This is issued with the approval of competent authority.

Encl: As above.

Yours faithfully
(DEVENDRA SHARMA)
Asst. Director (SB-II)

Source: DOP