National Savings Time Deposit (TD) Scheme, 2019: The Finance Ministry has notified National Savings Time Deposit Scheme, 2019 vide GSR 922 9E) dated December 12, 2019. The scheme provides for four types of time deposit (or fixed deposit) accounts – One-year account, two-year account, three-year account and five-year account. Deposits in these accounts can be made for one year, two years, three years and five years respectively. The TD account can be opened by a single adult, three adults in joint names, a minor below 10 years of age or a guardian on behalf of a minor or a person on unsound mind. An individual can have more than one TD account in his name or jointly with another.
The minimum deposit required in a TD account is Rs 1000. There is no maximum deposit limit. Any sum in multiples of Rs 100 can be deposited in the TD account.
Time Deposit Interest calculation
The current interest rates (per annum) offered on the four categories of time deposit accounts are:
- 1 year – 6.9%
- 2 year – 6.9%
- 3 year – 6.9%
- 5 year – 7.7%
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Key conditions: The interest rates offered on deposits in these four accounts are compounded quarterly and paid at the end of the year from the date of opening of the account.
An account holder can get the interest income credited to his/her savings bank account. In case the depositor doesn’t withdraw the annual interest earned on his deposited amount, it won’t earn any additional interest, according to the scheme.
Given the conditions mentioned above, here’s a look at the yearly interest Rs 1 lakh deposit in schemes of 1, 2, 3, and 5 years earn respectively (as per the current interest rate).
From the above chart, it can be inferred that a deposit of Rs 1 lakh in a 5-year account will earn a total of around Rs 7925×5 = 39,625 in five years as interest. You can withdraw the interest earned every year and reinvest in other schemes.
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Premature withdrawal: If a 5-year Time Deposit account is closed after four years from the date of deposit, the rate admissible for three-year Time Deposit account will be applicable for calculation of interest. Also, any interest already paid on the deposit will be recovered from the amount of repayment of deposit and the interest payable.
The TD account can be pledged or transferred as security, on an application made by the depositor in Form-5 supported with acceptance letter from the pledgee.
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Source: Financial Express