New rules for post office small savings schemes issued, investors advised to be cautious.

Small Savings Schemes: New KYC Rules for Post Office Depositors

The Central Government recently increased the interest rates on Small Savings Schemes, making them more attractive to investors. However, the Indian Government is taking steps to prevent money laundering and terrorist-financing activities by closely monitoring those who invest in these schemes. In a circular issued to India Post, depositors are now required to complete the Know Your Client (KYC) process to invest in these schemes.

Here are the key highlights of the new KYC rules:

Identifying Depositor Risk Categories

Depositors with accounts in India Post are categorized based on their investments – low risk, medium risk, and high risk. Those with certificates with maturity value up to Rs.50,000 or current balance in savings accounts not exceeding Rs.50,000 are identified as low-risk category. Those who have investments between Rs.50,000 to Rs.10 lakh fall into the medium-risk category, while those who invest more than Rs.10 lakh are considered high-risk category.

Mandatory Documentation Required

Investors in all three categories need to submit two passport-size photographs, Aadhaar Number, PAN No, and address proof. If the investor has no address proof, any document like driving license, utility bills should be submitted. For high-risk category investors, bank statements, Income Tax Returns, inheritance certificates, gift or sale deeds, wills, and any documents reflecting income are mandatory. If the depositor is a minor, KYC and income proof of the guardian is required.

KYC Renewal Periods

Depositors in the low-risk category must resubmit KYC every seven years, those in the medium-risk category every five years, and those in the high-risk category every two years.

Aadhaar Submission Deadline

Existing India Post depositors should submit their Aadhaar number by September 30, 2023, if they have not done so already.

PAN Submission

If the balance in any account exceeds Rs.50,000, if the amount of all credits in the bank account exceeds Rs.1 lakh in a financial year, or if the transfer or withdrawal from the account exceeds Rs.10,000 in a month, the PAN number should be submitted.

Failure to Submit Documentation

If the depositor fails to submit the required documentation, their account will be frozen.

With these new rules in place, depositors investing in Small Savings Schemes through India Post must ensure they have completed the necessary KYC documentation to avoid any disruptions in their investments.

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