Stop penalty on early withdrawal of SCSS in case of death: IBA to banks

Banks asked to capture closure reason in CBS

Commercial banks were found to be charging penalties for premature withdrawal of deposits even after the death of the account holders, when their kin wanted to withdraw the money.

The Indian Banks’ Association–the industry body for banks–upon noticing banks charging these penalties for the Senior Citizen Savings Scheme (SCSS) in violation of the existing rules, have asked banks to refrain from doing so.

“…we have come across complaint(s) that some banks, while processing settlements/premature payments of accounts to the legal heirs/nominees of deceased depositors under the captioned scheme [SCSS], are treating the same as premature withdrawal and levying penal interest,”