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Check terms of SCSS before making a claim

  • In such a case of death of the depositor, the SCSS account will be closed and the deposit will be refunded along with interest to the person named as nominee
  • If the scheme provides for a fixed rate of interest, then you should get the same fixed interest rate

My father had a Senior Citizen Savings Scheme (SCSS) in the post office for which I was the nominee. After my father passed away, I initiated the claim settlement process. But I (son) was given the interest rate as per the savings bank rates and not the SCSS interest rate, for the period between the date of his death and the closing of the account. Is that legal?

—Name withheld on request

We have assumed that your father passed away after the tenure (maturity period) of the SCSS. In such a case of death of the depositor, that is your father, the SCSS account will be closed and the deposit will be refunded along with interest to the person named as nominee, which in your case is you. However, in cases where no nominee is named, the amount accumulated in the account is supposed to be paid out to the depositor’s legal heirs in the event of the depositor’s death.

Usually, the refund of the deposit, along with the interest becomes payable on the demise of the depositor. The deposit along with the interest rate as applicable to the deposits under the post office savings accounts shall become payable from time to time on such matured deposits up to the end of the month preceding the month of account closure. This means the interest rate as applicable to post office savings accounts at the relevant period will be applicable and payable to the nominee, which in this case was paid to you.

You may want to go through the terms of your scheme to cross verify if the interest rates that are to be paid to the depositor is a fixed (frozen) one, or the rate which is applicable at the time when the scheme matures. If the scheme provides for a fixed rate of interest, then you should get the same fixed interest rate. However, if there is a floating rate of interest, it will be guided by the interest rate as applicable to the deposits under the post office savings accounts.

It is important to check the policy terms to have more clarity on the matter. Any action, including legal, can be taken only after ascertaining the terms of the scheme.

Aradhana Bhansali is partner, Rajani Associates .

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