Small savings account holders need to be more cautious now to close their accounts within three years of maturity, or the account will be converted into a frozen account. The Department of Post (DoP), through its order dated July 15, 2025, made it mandatory to review and identify the accounts that have not been closed within three years of maturity. According to the order, such accounts that have passed three years after their maturity date will be frozen regularly from now on. The freezing process will be conducted twice a year: on June 30 and December 31. The step is to ensure due KYC compliance and protect investors' money from fraud.
According to the order, "It was decided to freeze matured accounts under the schemes MlS, SCSS, TD, KVP, NSC, RD, and PPF accounts (that are matured but not extended), which have not been closed even after three years since maturity."
Here, MIS is the post office monthly income scheme, SCSS is the Senior Citizens Savings Scheme, TD is the Term Deposit, KVP is the Kisan Vikas Patra, NSC is the National Savings Certificate, RD is the Recurring Deposit, and PPF is the Public Provident Fund account.
Identification of these accounts for investors will be easier, as they will be assigned a reason code. The designated code for such will be 'INOP: inoperative more than 3 years'.
How Does The Latest Order Differ From The Previous Account Freezing Order?
Notably, DoP does not have a new rule for account freezing. Earlier, in its order dated December 16, 2022, the department issued direction to freeze accounts (MIS, SCSS, TD, KVP, NSC, RD) that have matured till September 30, 2019, but not closed. Also PPF accounts which have matured but have been not extended.
The only difference is that now account freezing has become a constant exercise.
When Will The Account Freezing Rule Change Take Effect?
The July 2025 order reads, "To further enhance the security of hard-earned money of depositors, it has now been decided that this freezing activity will be conducted twice a year as a continuous cycle. The process of identification and freezing of such accounts will be completed within 15 days, commencing from July 1 and January 1 of each year. This means accounts that complete three years of maturity as on June 30 and December 31 every year, respectively, will be identified and frozen."
Typically, senior citizens and many small investors open accounts with the post office, and once it matures, they keep the money lying intentionally to earn interest or, at times, forget about the account. But, now, one needs to be careful to close the account before the completion of three years from maturity to avoid requesting the unfreezing of the account and then closing it.
