Post Office Saving Schemes: How Monthly Income Scheme (MIS) Compares With Recurring Deposit (RD)

India Post or Department of Posts, which has a network of 1.5 lakh post offices, offers small savings schemes and insurance services, besides the usual postal services. Among the nine savings schemes that India Post provides, recurring deposit or RD account and monthly income scheme (MIS) offer an interest rate of up to 7.7 per cent for quarter ending March 31, according to India Post's official website - indiapost.gov.in. Both post office recurring deposit (RD) and monthly income scheme (MIS) offer guaranteed returns.

Given below are key features of post office monthly income scheme (MIS) and recurring deposit (RD):

Minimum/maximum investment

The minimum amount required to set up a monthly income account is Rs 1,500. Maximum investment limit is Rs 4.5 lakh in single account and Rs 9 lakh in joint account, according to India Post's website. The minimum amount required for opening a post office recurring deposit account (RD), on the other hand, is Rs 10 per month. There is no maximum limit on investment.

Interest rates

Post office monthly income scheme (MIS) account fetches an interest rate of 7.7 per cent. The interest on this account is payable monthly, according to India Post. Post office RD account, meanwhile, offers an interest rate of 7.3 per cent, which is compounded quarterly. 

Maturity

Post office MIS account matures in five years. The maturity period of post office RD account is also 5 years. However, the post office five-year RD account can be continued for another five years on a year-to-year basis, according to India Post.

Premature withdrawal

The post office MIS account can be prematurely en-cashed after one year. However, if it is en-cashed before three years, the post office deducts 2 per cent of the deposit. If you en-cash it after 3 years, 1 per cent of deposit is deducted, according to India Post. In case of post office RD account, one withdrawal up to 50 per cent of the balance is allowed after one year. However, it should be repaid in one lump-sum along with interest at the prescribed rate at any time during the currency of the account. In case of death of depositor, the full maturity value allowed on a post office recurring deposit (RD) is restricted to Rs 50 denomination, subject to fulfillment of certain conditions.