Department of Posts Issues Clarification on Premature Closure of 5-Year Time Deposit Accounts
The Department of Posts has issued an important clarification regarding the premature closure of 5-Year Time Deposit (TD) accounts after the completion of four years. The clarification specifies the applicability of the 2% interest deduction for accounts opened between 12 December 2019 and 9 November 2023.
According Closure of 5-Year Time Deposit the communication dated 24 July 2026, the matter was referred to the Department of Economic Affairs (DEA), Ministry of Finance, for clarification following a query from the Andhra Pradesh Circle. The DEA clarified that the amendments introduced through G.S.R. 830(E) dated 7 November 2023, circulated via SB Order 22/2023, are applicable only to Time Deposit accounts opened on or after 9 November 2023.
The Department has further clarified that Time Deposit accounts opened before 9 November 2023 will continue to be governed by the provisions of the National Savings Time Deposit Scheme, 2019, as they existed before the amendment.
Accordingly, for 5-Year Time Deposit accounts opened between 12 December 2019 and 9 November 2023, if the account is prematurely closed after completing four years, the interest payable will be calculated at the rate applicable to the corresponding 3-Year Time Deposit, minus two percentage points, as provided under Rule 8(c) of the National Savings Time Deposit Scheme, 2019.
The clarification has been issued with the approval of the Competent Authority and circulated to all Heads of Circles for information and necessary action in similar cases.
This clarification will help ensure uniform implementation of premature closure rules across all Post Offices and provide greater clarity to both postal officials and Time Deposit account holders regarding the applicable interest calculation for eligible accounts.