Govt. of India has revised investment rules relating to the investments by the Non-Resident Indians (NRIs) in the Small Savings Schemes. Amended rules have been notified in the gazette notification.
Changes stipulate that certain NRI accounts in the small savings schemes, will be closed prematurely if status of the account holder changes from the Resident to the NRI.
Resultantly, such account holders will earn only the post office savings account rate of 4% p.a. and not applicable higher rate on subject instruments when status was that of a resident.
For account holders of the Public Provident Fund (PPF), account shall be deemed to be closed the day their status changes to NRI.
Amendment to Public Provident Fund Act, 1968 stipulates that, “… if a resident who opened an account under this scheme subsequently becomes a non-resident during currency of maturity period, account shall be deemed to be closed with effect from day he becomes a non-resident…”
Interest with effect from that date will be paid at 4% rate applicable to post office savings account up to last day of month preceding the one in which account is actually closed.
Separate notification has been issued in respect of the National Savings Certificate (NSC), which states that an NSC it is deemed to be encashed on day holder becomes an NRI. The Notification further states that,“…interest shall be paid at rate applicable to Post Office Savings Account, from time to time, from such day and up to last day of month preceding month in which it is actually encashed”.
Source Corp Comm Legal