The authorities managing all fixed maturity investment schemes discourage premature withdrawal. The biggest loser in case of premature withdrawal is the investor himself. On premature withdrawal, all the interest income flowing in from the deposit will stop.
However, there might be exigencies when one might need to withdraw funds. This is especially true since MIS accounts are mostly opened by senior citizens, who might suddenly money for medical emergency or some other unforeseen circumstances. The rules have been framed to address these situations.
Can MIS account of 5 years be closed prematurely
The tenure of a post office monthly income scheme is 5 years. Any money withdrawn before the completion of 5 years from the date of opening of the POMIS account is regarded as premature withdrawal. The rules governing investments in post offices state that in the first year after opening a POMIS account, no money deposited in the account can be withdrawn, whatever the exigency. However, premature withdrawal can start after 1 year has passed after the MIS account has been opened.
What is the penalty for premature withdrawal?
The rules have detailed the penal charges that will be applicable in case a depositor wishes to withdraw money prematurely after the expiry of 1 year since the opening of the account. If the POMIS account is closed after 1 year and before 3 years from the date of account opening, an amount equal to 2% will be deducted from the principal. The remaining amount after deduction of the penal charges will be paid to the depositor.
If the depositor wants to withdraw the money and close the account at any point of time after 3 years and before 5 years off opening the account, less penalty is charged. The penal amount now declines to 1% of the principal. One has to remember that an application in prescribed format has to be submitted to the post office along with the POMIS passbook to close the account and withdraw the amount.
