Post Office Savings Schemes: A Comprehensive Guide

Saving is an essential part of one’s life. In simple words, saving is the income that you have not spent. Your saving helps you to accumulate corpus, further resulting in a stress-free life regarding your financials.You can save the money in many ways such as; simply putting it in a piggy bank, opening a deposit account in a bank or in post office savings schemes.

Few questions that strike you here are: Which one suits you the best? Which one can fulfill your financial goals?

Department of Posts (DoP) has been coupling Indian citizens and Government of India, touching the lives of Indian citizens for more than 150 years, providing services such as delivering mails, accepting deposits under Post Office Savings Schemes, life insurance services, retail services etc.

Let us go through the various Post Office Savings Schemes to help you choose the one as per your requirement:

Regular Income Schemes

1. Monthly Income Scheme (MIS) Account:

Interest of 7.4% per annum is paid on a monthly basis. Let us go through some of the salient features of this scheme:

The amount should be deposited in multiples of Rs. 1,000.

Any individual can open the account. 2 or 3 adults can open a joint account and all joint account holders have the equal share in each of the joint account. An individual can invest up to Rs. 9 lakhs individually and Rs. 15 lakhs jointly.

Any number of accounts can be opened in any post office provided; the total balance in all the accounts does not exceed the maximum investment limit.

Auto credit facility of monthly interest into savings account, if the account is at the same post office, available through PDCs or ECS.

Premature encashment is allowed between 1-3 years from the account opening subject to the deduction of 2% from the deposit amount and 1% in case of encashment after 3 years.

2. Senior Citizen Savings Scheme (SCSS) Account: 

Interest at the rate of 8.2% per annum is payable on quarterly basis. Let us go through some of the salient features of this scheme:

Only one deposit in the account in multiple of Rs. 1,000 is permissible. The maximum deposit is Rs. 30 Lakhs.

Any individual having an age of 60 years or above can open the account. The account can also be opened by an individual who is 55 years or above but less than 60 years and has retired on superannuation or under VRS provided; the account is opened within 1 month of the receipt of the retirement benefits and the deposit amount should not exceed the retirement benefit amount.

For the amount below Rs. 1 lakh, account can be opened by cash and for the amount equal to or above 1 lakh, account can be opened by cheque only. In case of cheque, the date on which the cheque is realized in government account will be the account opening date.

Any number of accounts can be opened in any post office provided; the total balance in all the accounts does not exceed  the maximum investment limit. Accounts are transferable from one post office to another. In case of joint accounts, the first depositor will be the investor; can be opened with spouse only.

Auto credit facility of quarterly interest into savings account, if the account is at the same post office, available through PDCs or Money Order.

In case of Core Banking System (CBS) Post Offices account, interest will be payable on quarterly basis on the 1st working day of April, July, October and January. Also, this quarterly interest can be credited to any savings account at any other CBS Post Offices.

Premature closure is allowed after 1 year subject to the deduction of 1.5% of the deposit amount and 1% deduction in case of 2 years.

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Deposit Schemes

1. Savings Account:

Post office savings account offers the interest rate of 4% per annum. The account can be opened with Rs. 500, cheque facility is available for the account and the minimum balance to be maintained in such account is Rs. 500.

2. 5-Year Post Office Recurring Deposit Account:

Recurring deposits offers the interest rate of 6.20% per annum (compounded quarterly). Let us go through some of the salient features of this scheme:

Minimum amount for opening the account is Rs. 100 or any amount in multiples of Rs. 10.

Any individual can open the account. Upto 3 adults can open the joint account. Any number of accounts can be opened in any post office and the accounts are transferable from one post office to another.

 Account can be opened through cash or cheque mode. In case of cheque, the date of the deposit shall be the date of clearance of cheque.

3. Time Deposit Account:

On time deposit accounts, interest is paid annually but is calculated quarterly. Interest rate in time deposits are listed below:

Any individual can open the account. Upto 3 adults can open the joint account. Any number of accounts can be opened in any post office and the accounts are transferable from one post office to another.

Account can be opened through cash or cheque mode. In case of cheque, the date on which the cheque is realised in government account will be the account opening date.

On maturity depositor may further extend TD account for another tenure for which account was initially opened. For example: If the account was initially opened for 3 years, it will be automatically renewed for another 3 years.

Schemes for Accumulation of a Corpus

1. Public Provident Fund (PPF) Account:

Interest paid on PPF account is 7.1% yearly. Let us go through some of the salient features of this scheme:

Account can be opened by depositing Rs. 500. Deposit can be made through a one-time payment or in 12 months installments.

Account can be opened through cash or cheque mode. In case of cheque, the date on which the cheque is realized in government account will be the account opening date.

Joint account cannot be opened.

PPF account gets matured in 15 years and can be extended to further 5 years subject to the application given within one year of maturity. No premature closure permissible.

Also read: Choosing between PPF, NPS and ELSS

2. Kisan Vikas Patra (KVP):

The implicit interest rate for this scheme is approximately 7.50% per annum. Let us go through some of the salient features of this scheme:

Amount invested becomes double in 115 months i.e. 9 years & 4 months.  Minimum Investment amount is Rs. 1000 and in multiples of 100 thereafter.

KVP certificates can be purchased from any departmental post offices and are transferable from one person to another, from one post office to another.

It can be purchased by any adult or on behalf of any minor or joinlty by upto 3 adults.  It provides the facility of encashment after 2 years and 6 months from the issue date.

3. National Savings Certificates (NSC)- NSC VIII:

Interest rate is 7.7% and is compounded annually but is payable at maturity. Let us go through some of the salient features of this scheme:

Minimum Investment is Rs. 1000 and in multiples of 100 thereafter. No Maximum limit.

HUF and Trust cannot invest in NSCs.

Loan from banks can be availed by using the certificates as a collateral.

It cannot be prematurely closed unless the death of the certificate holder or on order by the court.

Certificates can be transferred from one person to another in case of death.

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4. Sukanya Samriddhi Account:

Rate of interest offered under this scheme is 8.0% per annum calculated annually. Let us go through some of the salient features of this scheme:

Minimum deposit amount is Rs. 250. Following deposits can be made in multiple of Rs. 50. Deposits can also be made in lump sum. There is no limit on the number of deposits made in a month or a financial year.

This account can be opened by a legal/natural guardian in the name of a girl child. The guardian can open only one account in the name of one girl child or no more than two accounts in the name of two different girl children. It can be opened for girls aged up to 10 years only.

 If the minimum deposit of Rs. 250 is not made in a financial year, then the account will be discontinued, and can only be restored when a penalty of Rs. 50 is paid for each year along with the minimum amount required to be deposited in that financial year.

Also read: Sukanya Samriddhi Yojana: Empowering India’s Daughters

5. Mahila Samman Savings Certificate:

Rate of interest offered under this scheme is 7.5% per annum compounded quarterly. Let us go through some of the salient features of this scheme:

Minimum deposit amount is Rs. 1,000. Following deposits can be made in multiple of Rs. 100. Maximum amount of deposit is Rs. 2 Lakhs.

This account can be opened by a woman herself or by the guardian on behalf of a minor girl. Any number of accounts can be opened provided there should be 3 months of gap between opening new accounts and total deposit amount should be up to Rs. 2 Lakhs.

40% withdrawal of eligible balance can be taken after one year from the date of account opening.

Maturity is after 2 years of from date of opening the account. Though partial withdrawal is allowed for 40% of the balance after 1 year from the date of account opening.

Premature closure is available on death of account holder or life threatening disease or after 6 months of account opening without mentioning any reason.

Disclaimer: This article should not be construed as investment advice, please consult your Investment Adviser before making any investment decision. If you are looking for a SEBI registered Investment Adviser visit mymoneysage.in

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  • william charles says:

    Your information is very valuable. Department of Posts (DoP) This is a good information for Indian citizens. Your information will benefit the Indian citizen.
    Thanks for your information

    Pincodezone

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