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What interest rate is applicable when you extend SCSS?

Read further to know if your SCSS account attracts a different rate of interest upon extension

What interest rate is applicable when you extend SCSS?

The Senior Citizen Savings Scheme (SCSS) is a risk-free government-backed scheme that offers a guaranteed return to the retirees. The scheme has a tenure of five years, but you also have an option to extend it by another three years.

Every quarter, the government announces the rate of interest for SCSS and if you deposit your money in that quarter, the rate of interest as applicable on the day of deposit gets locked in for the entire tenure of five years. So if you invested in SCSS in 2017 and the interest rate at that time was 8.40 per cent, then you would've earned it in the entire five-year tenure.

Now, suppose your SCSS account is about to mature and you wish to extend it. You can do so by submitting Form B, which can be obtained online or from your nearest bank or post office. It's a simple application requesting an extension and here's how it looks in the case of the SBI.

Do note that you must submit an extension within one year of maturity. Once you have extended your account for a period of three years, you cannot extend it again. There are no automatic extensions, so if you don't close the account on maturity or request for an extension within one year, the account shall be considered as matured.

When it comes to the rate of interest on the extension, the old rate is not applicable anymore. The new revised rate announced by the government will be applicable. Just like before, this new rate will be locked in for the next three years of the tenure. Adding onto the previous example, suppose your old rate was 8.40 per cent and you wished to extend the tenure by another three years, and since the current rate is 7.40 per cent, this new rate will be applicable for the next three years.

Suggested read: How to invest beyond Rs 15 lakh in SCSS?

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