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POSTED BY ON May 5, 2013 7:24 pm COMMENTS (9)
Sir,
My parents have been investing in Postal RDs. I would like to know rules for premature closure:
1. After how many months can it be closed prematurely?
2. What will be the rate of interest applicable?
The officials in the Postal department in our town dont know the rules and claim that any closure before 3 years – we tend to lose the principal invested too. is this right?
The rule book present in the website of postal department is very old and I found few articles about the amendment of 2011 in few blogs which surprisingly is not mentioned on the official website.
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Dear Shailesh, in case of default, the principal can not be hold back by the PO. At best the interest ‘ll not be given at the coupon rate & the investor may get SB interest rate. This is an answer based upon my understanding of the system not from any official rule book.
Thanks
Ashal
sir, does that mean if the account is discontinued, i tend to lose whatever i have invested until then or will I receive the amount that I have invested without any interest?
I think you will receive what you invested + interest earned up to the date of discontinuation.
Sir,
many thanks for the kind reply.
I went through various blogs and found contradictory statements. Am sending the links here –
http://www.investmentkit.com/government/rd.shtml
Kindly confirm whether they are wrong.
Thanks.
Sir,
In continuation to my query, in case of default in paying monthly installments say after a period of 1 year what happens in that scenario? (considering premature closure is not allowed before 3 years)
My understanding is a default will not affect premature closure in any way.
Defaults will affect withdrawals. How exactly is not clear in the rule book. For example:
If there are more than 4 defaults in monthly payments then 50% withdrawal after 1 yr may not be possible.
Sir,
What I meant to ask was: In case there are no payments made after regularly making payment for 1 year (12 monthly deposits), what happens to the account then?
The account will become discontinued.
In general the account will become discontinued if payments are not restarted within two months of the month of the 5th default.
The 2011 amendment does not seem to refer to premature closure. This implies that the old rule of ‘premature closure allowed (only) after 3 yrs’ still holds.
So I don’t think closure before 3 yrs is allowed. So no question of losing principal.