Invest in Postal Savings Schemes

What is an Post Office Savings Scheme

In many countries, post offices operate not only postal services but also leverage their wide network to extend the reach of financial services and small investments to even those depositors who do not have access to banks. So Postal Savings Schemes (or Post Office Saving Schemes) have been typically regarded as a safe, convenient & widely available method to save money and promote savings among the middle and lower middle class sections of society. The first nation to offer Postal Savings Schemes was Great Britain, followed by Japan, China, Korea, Germany, Brazil, France, South Africa, Sri Lanka, etc.

In India too, post offices offer various savings and investment products on their own or on behalf of the government of India. The most prevalent Post Office Savings Schemes at present are:

Post Office Savings Account
Recurring Deposits (RDs)/Term Deposits (TDs)
Post Office Monthly Income Scheme (POMIS)
National Savings Certificates (NSCs)
Kisan Vikas Patra (KVP)
Senior Citizens Savings Scheme (SCSS)

In addition to the above, Indian post offices also act as nodal points to invest and transact in your Provident Fund Account and newly launched

Sukanya Samriddhi Account.

Public Provident Fund (PPF) Sukanya Samriddhi Accounts (SSA) Types & Features of Postal Savings Schemes

Post Office Savings Account -Your savings account in a post office is as good as a bank account you maintain with any public sector bank. A Post Office Savings account doesn't come with a cheque book facility like your normal bank account. You will continue to earn 4% annual interest and interest amount up to ₹10,000 will be exempted from tax under section 80TTA.

Recurring Deposits (RDs)/Term Deposits (TDs) -Like the RD or FD that you do with a bank, you can make an RD or FD with a post office. Currently the interest rate on recurring deposits RD) and term deposits (TD) stands at 8.40% for all tenures, except fixed term deposit of 5 years tenure where the interest is 8.50% per annum. A 5-year term deposit with a lock-in clause also gives you the benefit of it being treated as investment under section 80C and hence helps you save on tax under section 80C.

Post Office Monthly Income Scheme (POMIS) -Among the most selling investment products of post offices at one time, POMIS offered a terminal bonus of 10% and then 5%. However, the Post Office Monthly Income Scheme is getting more and more unpopular these days. Compared to the Post Office MIS, today you have better choices in terms of bank Fixed Deposits (FDs) as they bring you a relatively higher rate of interest, better liquidity and quarterly interest payments.

Recurring Deposits (RDs)/Term Deposits (TDs) -Like the RD or FD that you do with a bank, you can make an RD or FD with a post office. Currently