Following changes in investment rules for select small savings schemes, the government has said such accounts will be closed before their maturity in case status of the holder changes from resident to non-resident Indians. NRI holders will earn only post office savings account rate of 4 per cent and not the higher rate on those instruments when the status was one of a resident.
Where public provident fund (PPF) is concerned, the account is deemed to be closed the day the status of the account holder changes to NRI. The amendment to the Public Provident Fund Act, 1968 reads, “If a resident who opened an account under this scheme subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident.” With regard to NSC, a separate notification said it is deemed to be encashed on the day the holder becomes an NRI. “Interest shall be paid at the rate applicable to the post office savings account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed.”
