The Indian Postal System was set up more than 150 years ago by the British Raj during the pre-independence period of India. It was truly a remarkable achievement for the period considering the diversity of terrain that made India so unique also made setting up an efficient pan-India system of delivering letters that much more difficult. As a result of its reach to the most remote corners of the country, the Indian Post Office diversified from the simple delivery of letters at a later date to include a range of services such as handling and distributing financial products. This foray into financial products has continued post-independence and now at certain post offices, you can easily avail mutual fund investments apart from a range of savings products. In the following sections, we will discuss which are best saving schemes in Post Office.
Monthly Income Scheme
The monthly income scheme is one of the most commonly availed post office savings schemes available in India. This requires the establishment of a separate account with tenure of 5 years and this account can be easily transferred from one post office in India to another. Deposits can be made either via cheque or draft and there is no limit on the number of these accounts that an individual can open at any post office across India. The monthly deposit scheme can also be opened for a minor by the parent or a legal guardian, while joint account facility is also available in this case. The current rate of interest offered under this scheme is 7.6% annually with interest payable every month. In case of premature encashment, available interest rate is deducted by 2% or less.
Time Deposit (TD) Account
This is the post office variant of the 80C tax saver fixed deposit scheme, provided the tenure of the deposit is at least 5 years. TD schemes of shorter tenure operate much like bank fixed deposits however the rate of interest offered is usually slightly higher than those offered by leading Indian banks. There is no limit on the number of Time Deposit Accounts that an individual can open and these can be sole operated or jointly operated account as per the requirement of the account holder(s). Currently, the interest rate offered by Post Office Time Deposit Accounts can range from 6.9% to 7.7% depending on the tenure. The minimum deposit allowed in the scheme for tenure of up to 5 years is Rs. 200, while there is no maximum limit on this. It is notable that 80C benefits are applicable only up to Rs. 1.5 lakhs annually.
National Savings Certificate
When determining which are best saving schemes in Post Office, the most often missed one by far is the National Savings Certificate. Considered to be much less effective way to generate savings in the current scenario, these certificates were savings instruments of choice in the recent past. With little to no risk associated with them, these were and continue to be a source of guaranteed savings. The tenure of each certificate is 5 to 6 years depending upon the tranche and the minimum amount that can be invested yearly is Rs. 100. In the most recent version of NSC, the certificate denominations on offer were Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs. 10000. As of the 1st quarter of 2017 financial year, the interest rate on offer is 8.1%, which is compounded on a quarterly basis. Moreover, there is the facility of premature withdrawal after completion of a 3 year period from date of initial investment or in case of demise of the certificate holder.
The post office savings schemes mentioned above are but three among the many savings schemes that are currently on offer. In fact, even though PPF, Sukanya Samriddhi, savings account, Kisan Vikas Patra, etc. have not been mentioned in the list of which are best saving schemes in Post Office, their importance cannot possibly be overstressed. This is mainly because the key strength of the post office is its reach and its ability to provide world-class savings schemes and financial services to even the mostly unbanked and often severely unbanked rural population of India.
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