While parking our investible surplus, we give utmost priority to safety besides the return aspect. And similar to depositors in bank FDs that are insured for up to Rs. 5 lakh as per the latest Deposit Insurance and Credit Guarantee Corporation (DICGC) rules, post office savings schemes carry a sovereign backing i.e. there shall be no chance of default on the principal and interest payment.
And now as you are assured on the safety aspect, here we suggest a post office scheme that considering the current low interest rate regime, offers a way higher return of 6.6 percent per annum payable monthly in comparison to bank FDs that for a similar tenure of 5 years fetches a return of just 5.4% at SBI. Yes, this is Post Office very popular MIS scheme.
Now here we give details on the fixed income scheme which can help you earn steady income stream:
Eligibility to open MIS or monthly income scheme at Post Office:
1. A single adult
2. In joint account MIS account can be opened with up to 3 adults
3. A guardian on behalf of minor or person of unsound mind
4. A minor aged 10 years can also open the account in his or her name
How To Open MIS account?
MIS account can be opened by making the payment in cash or via cheque. And in respect of cheque, the date on which the amount is realized by the Department of Post shall be taken as the account opening date. Any number of MIS accounts can be opened in any post office subject to the upper limit of investment of Rs. 4.5 lakh in all the accounts.
Minimum investment amount:
To open the MIS account a minimum investment of Rs. 1000 is needed. One can invest in multiples of Rs. 100 thereafter. In a single account one can deposit a maximum of Rs. 4.5 lakh while joint account can be maintained with a cap of Rs. 9 lakh investment.
In all the MIS accounts opened by an individual, deposits shall not exceed Rs. 4.5 lakh. For other account opened on behalf of a minor as guardian, the limit shall be separately considered.
Investment starts earning from the first month of investment and the interest shall be credited at the end of every month.
Premature Withdrawal or closure of MIS account
The MIS account has a lock in of 5 years and no withdrawal is allowed before the expiry of 1 year from the MIS account opening date. Besides if account is closed after 1 year but before the expiry of 3 years from the account opening date then a deduction of 2 percent will be made from the principal amount and remaining will be paid back. Further, in case the account is closed after 3 years but before 5 years then a deduction of 1% will be made from the principal amount.
For closure of the account pre-maturely, prescribed application form along with the pass book needs to be submitted at the concerned post office.
On death of the account holder:
In case the MIS account holder dies before the completion of the tenure of the MIS account, the amount can be closed and amount will be paid to the legal heirs or nominee. Interest will be paid up to the preceding month, in which refund is made.