Definition: The Post Office Monthly Income Scheme is a saving scheme backed by the government of India on which fixed interest is paid. This scheme is offered by the department of post and aims at providing regular monthly income to the depositors.
The post office monthly income scheme offers several features to help investors to earn regular monthly returns on the deposits. These are:
- The rate of interest is 8% per annum (w.e.f. 1 April 2016) payable monthly.
- The minimum amount of investment is 1500. The maximum limit of deposit is Rs. 4.5 Lac in the case of a single account and Rs. 9 Lac in a joint account.
- The account can be opened either individually or jointly by two or three adults. All the joint account holders have an equal share in the joint account.
- Also, the account can be opened in the name of a minor or a minor of the age of 10 years or above can open and operate the account.
- The tenure of a scheme is 5 years. A bonus of 5% on principal amount is payable on the maturity with respect to the accounts opened after 8/12/2007 and up to 30/11/2011. However, no bonus is given on deposits made on or after 1/12/2011.
- The interest amount can be drawn through auto credit in the saving account held at the same post office through PDCs or ECS. In case of a CBS (Core Banking Solution) post office the interest can be auto credit in any savings account held in any CBS post office.
- The facility of premature withdrawal is available, the balance amount can be withdrawn after 1 year, but before 3 years with a 2% deduction and after 3 years with a 1% deduction of deposits.
- The nomination facility is available at the time of the opening of the account and also after the opening of the account.
Note: The Single account can be converted into a joint account and vice versa. Also, a minor after attaining the maturity (at 18 years) must apply for the conversion of an account in his name.