Post offices after banks are the most trusted institutions in India as far as savings are concerned. Additionally, they offer better interest rates to customers and guaranteed returns as well. So if you are a typical Indian investor who is quite conservative with their money but also expects guaranteed returns that too at ‘not-so-bad’ interest rate, post office savings schemes are for you. Another feather in the cap is that post office savings offer 80C benefits too. Here is a list of various savings schemes Indian Post offers;
- Post office savings account
This is the basic savings account offered by the post office. The interest rate is 4% per annum. There are ATM and cheque facilities available under this account. There is a minimum balance requirement under this account which is Rs. 50 and up to Rs. 10,000 is tax-free interest earned on this account. There is a provision for both single and joint accounts and payments can be made both physically and electronically.
- 5-year Recurring Deposit
The interest rate of RDs is 6.9% per annum and is compounded quarterly. You can open an account with a minimal amount of Rs. 10 and subsequent monthly deposits as multiples of five can be made. There is no cap on the number of accounts. Also, there is a rebate if you make at least 6 installments in advance.
- Post office time deposit (TD)
PO time Deposit is a better returning saving avenue which can be opened with a minimum Rs. 200 deposit. There is no cap on the maximum amount. The calculation of interest is done quarterly and is paid on an annual basis. Again, there is no cap on the number of accounts. The rate of interests are as follows:
- 1-year account: 6.6%
- 2-year account: 6.7%
- 3-year account: 6.9%
- 5-year account: 7.4%
- Post office monthly income scheme account (MIS)
The MIS schemes offer a good 7.3% interest per annum with a minimum Rs. 1500 deposit. The interest in this scheme is paid on a monthly basis. There is a cap on the maximum deposit which is Rs. 4.5 lacs for a single account and Rs. 9 lacs in case of a joint account. The maturity period is 5 years.
- Senior citizen savings scheme (SCSS)
This account is for senior citizens only. If you are 60 years plus, you can open this account. The interest rate is 8.3% per annum but paid quarterly. There is a maximum cap on the investment amount which is Rs. 15 Lacs. The transactions can be made only as multiples of 1000.
- PPF account with a 15-year lock-in
A 7.6% interest is paid under the 15-year PPF account in the post office which is compounded annually. A minimum investment of Rs. 1000 is required to open the account with a cap on maximum investment per year as Rs. 1.5 lac. The total deposit can be made as a lump sum amount or in a maximum of 12 installments. The interest which you earn on this investment is totally tax-free. There is a lock-in of 15 years wherein premature closure is also not allowed. Premature and partial withdrawal is allowed that too 7th year onward after opening the account.
NSC offers an interest of 7.6% which is compounded annually but is only paid once the maturity is achieved. There is a 5-year lock-in in case of this scheme. You can start the account with Rs. 100.
- Kisan Vikas Patra (KVP)
An annually compounded interest rate of 7.3% is paid under the Kisan Vikas Patra scheme. The minimum deposit is Rs. 1000 with no cap on the maximum amount. The withdrawal can be made after 2.5 years from the date of issue of the certificate or patra.
- Sukanya samriddhi yojana
This is an initiative of the government of India towards the welfare of the girl child. The account can be opened only for girls under the age of 10 years right from their birth. The interest under this scheme is 8.1% per annum and compounded on a yearly basis. The money can be withdrawn partially when the girl attains the age of 18 years and the complete withdrawal can be made at the age of 21 years. A minimum of Rs. 1000 needs to be invested per year with a cap on maximum investment as Rs. 1.5 lacs.
There are several schemes the Indian Post offers investors to safeguard and grow their money. These schemes are a good option to diversify your portfolio with schemes which come with assured returns. The only thing that needs to be paid attention to is the massive lock-in period which they come with. Mutual funds are options which offer great interest rates with no lock-in, ELSS funds are the ones which offer tax-saving as well.