News Insight

New Delhi | May 2025 — In a major financial policy change affecting thousands of long-term investors, the Government of India has officially ceased all interest payments on National Savings Scheme (NSS) accounts, effective October 1, 2024.

This decision impacts legacy accounts under the NSS-1987 and NSS-1992 schemes, both of which were discontinued in 1992 and 2002 respectively for new subscriptions. Until recently, these schemes continued to accrue interest on existing balances — offering a steady income stream for many retirees and conservative savers. That benefit has now come to an end.

Who’s Affected?

While no new deposits have been allowed for years, many account holders—particularly senior citizens and pensioners—have maintained their balances in these schemes, viewing them as safe, interest-bearing assets. The government’s decision to stop interest accrual has sparked concern, especially among those who were depending on this income for their post-retirement financial planning.

Financial institutions have already begun notifying depositors, urging them to evaluate their portfolios and consider alternatives.

Why the Change?

Experts suggest this is part of a broader shift to streamline small savings schemes and eliminate outdated products that are no longer aligned with current financial frameworks. The government appears to be nudging savers toward modern instruments like the National Pension System (NPS) and Public Provident Fund (PPF), which are more sustainable and transparent.

“This move is significant. It’s not just about ending interest payments; it’s a signal that legacy schemes are being formally retired,” said Ritesh Malhotra, a Delhi-based tax consultant.

What Should Investors Do Now?

Financial advisors recommend that affected individuals revisit their savings strategies. Many are calling for a one-time tax-free withdrawal window or some form of transitional relief to soften the impact, though no official announcements have been made on that front yet.

For now, if you hold an NSS account under the 1987 or 1992 scheme, it may be time to speak with your bank or financial planner about your next steps.

Conclusion: The era of interest-bearing NSS accounts is over. If you still have funds in these schemes, this is a crucial moment to reevaluate your financial roadmap and explore more productive investment avenues.