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Post Office Schemes Vs Bank Fixed Deposits; Why Post Office Is Better?


If you are looking to invest money safely and with higher interest rates, than post office deposits are the way to go. They are not only very safe, but, also offer higher interest rates than most bank fixed deposits in the country. Let's tell you some of the reasons to invest in post office schemes:


Post office interest rates comparison with banks

Post office interest rates comparison with banks

Most of the larger size banks in the country have dropped interest rates sharply. A regular deposit at State Bank of India gives investors a maximum interest rate of 5.4 per cent for 5 years and above.

On the other hand, if you take a similar tenure at the post office, that of the National Savings Certificate or NSC, which is a 5-year scheme, you get an interest rate of 6.8 per cent. This is a good 1.4 per cent more than what SBI is offering. Most of the bigger banks are offering interest rates around that 5.5 per cent range. In fact, the Kissan Vikas Patra is offering an interest rate of 6.9 per cent, which is way better than banks.

Bank FDs/Post Office Scheme Interest rate
ICICI Bank regular deposits Maximum 5.5%
SBI Regular Deposits Maximum 5.4%
Hdfc Bank Regular Deposits Maximum 5.5%
Kissan Vikas Patra 6.9%
NSC 6.8%
Post Office Time Deposit 6.7%


Since the post office schemes are backed by the Government they are very much safe. The same cannot be said about banks. We all know what happened in the case of Yes bank and the PMC Bank Scam. Deposits in banks are insured only up to a sum of Rs 5 lakhs only. Beyond that one is carrying a risk.

With the kind of non performing assets the banking sector is seeing, one is not sure even of banks these days. In terms of safety the post office schemes definitely are ahead. Even for those looking at long-term investment, the risks are far lesser when compared to banks.

Banks Fds do have some advantages

Banks Fds do have some advantages

Investing in bank instruments do have some advantages. The biggest of these is service. One cannot expect the same level of service from post office. Apart from this, when it comes to adoption of technology and digital, banks are way ahead.

Apart from this, you have to visit the post office to complete your investment process or for deposits or encashment. The same is not true for banks deposits or bank investments, where most of the stuff is done through the online process, whether it is encashment or deposits.

For those willing to compromise on service for safety and higher interest rates, post office schemes are a better bet.

About the author:

About the author:

Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds, debt, commodities and tax planning.

Story first published: Monday, September 21, 2020, 10:19 [IST]
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