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April 14, 2000

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Post office savings schemes

Larissa Fernand

Don't just view the post office as a place to drop your Diwali or Christmas cards. You can get some good investments here.
Of course, the carrot being dangled is the tax benefit, the notable exception being Kisan Vikas Patra. Its attractiveness lay in the interest rate being offered which has come down over the years.

Some instruments like the post office recurring deposit force you to save on a monthly basis.
Others like the PPF have an annual compulsion to it.
If you have just come into a lump sum and don't want to 'blow it up', then opt for the one-time investment of post-office time deposits. You can select an investment tenure that suits you.
The National Savings Certificate is also a one-time investment, but your money should stay deposited for six years.

If you are totally risk-averse or if you have a high tax liability, then investing in some of these schemes is a must. Below is what's available on a platter.


Instrument Tenure Interest Limit on Investment
Tax Benefit
Liquidity Availability
 Post office
 recurring
 deposit
 5  10.5 compounded quarterly
 Rs 10 per month no limit. Investments in multiples of Rs 5
 Section 80L
 Premature withdrawal, No loan facility
 Head post offices, Select sub-post offices
 Post office
 time deposits
 1
 2
 3
 5
 8
9
10
10.5 (compounded quarterly)
 Rs 50 no limit. Investments in multiples of Rs 50
 Section 80L
 Premature withdrawal, Loan facility
 Head post offices, select sub-post offices
 Post office
 savings
 account
 Not applicable
 4.5
 Rs 50,000
 Section 10
 Withdrawal, No loan facility
 Head post offices, Select sub-post offices
 Post office
 monthly
 income
 scheme
 6
 11 compounded annually (10% bonus on maturity)
 Rs 2,04,000: single account Rs 4,08,000: joint account
 Section 80L
 Premature withdrawal, No loan facility
 Head post offices, Select sub-post offices
 National
 Savings
 Scheme
 1992

 None but can be closed after 4 years after the last deposit
 10.5 compounded annually
 Rs 100 - Rs 40,000 p.a.
 Section 88, Section 80L
 Premature withdrawal, No loan facility
 Head post offices, Select sub-post offices
 National
 Savings
 Certificate
 6
 11 compounded half-yearly
 Rs 100
 Rs 500,
 Rs 1,000,
 Rs 5,000,
 Rs 10,000
 Section 88, Section 80L
 No premature withdrawal, No loan facility
 Head post offices, Select sub-post offices
 Public
 Provident
 Fund

 15
 11 (compounded annually)
 Rs 100 Rs 60,000 p.a. Investment in multiples of 100
 Section 88, Section 10
 Premature withdrawal, loan facility
 Select post-offices, banks
 Kisan Vikas
 Patra

 6
 Investment doubles, interest compounded annually
 Rs 1,000, Rs 5,000, Rs 10,000
 None
 Premature withdrawal, No loan facility
 Post offices, brokers/ agents of LIC, UTI
 RBI Relief
 bonds

 5
 9 compounded half-yearly: cumulative
 Rs 10,000 no limit. Investment in multiples of 1000
 Section 10
 No premature withdrawal No loan facility
 RBI agents and brokers
 Deposit
 Scheme for
 Retiring
 Employees
 of PSUs
 (1991)
 3
 10 compounded half-yearly
 Rs 1,000 total retirement benefits
 Section 10
 Premature withdrawal, No loan facility
 SBI branches and subsidiaries, select nationalized branches, select sub-post offices
 Deposit
 Scheme for
 Retiring
 Government
 Employees
 (1989)
 3
 10 compounded half-yearly
 Rs 1,000 total retirement benefits
 Section 10
 Premature withdrawal, No loan facility
 SBI branches and subsidiaries, select nationalized branches, select sub-post offices

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