Dear Comrades,
National Pension Scheme
The telegram may be dead and postage stamps on their way out, but the post office is not sliding into oblivion. It small savings schemes are a favourite with investors, and if India Post bags the banking licence, it could be a financial powerhouse with it's 1.55 Lakh branches. Here are some of the products and services offered by the Post Office.
SAVINGS ACCOUNT
Tenure: NA
Interest rate: 4%
It has a very low minimum balance requirement of Rs.50 without cheque facility, and Rs.500 with cheques.
RECURRING DEPOSIT
Tenure: 5 years
Interest rate: 8.3%
* Investor is given a flexible window of up to 15 days to deposit the sum.
* It is not necessary to open a savings account as well.
* The term can be extended by up to five years on maturity.
TIME DEPOSITS
Tenure: 1 - 5 years
Interest rate: 8.2 - 8.4%
The five-year deposits are eligible for tax deduction under Section 80C.
Minors above 10 years can open and operate account.
Deposits can be foreclosed after one year. The one-year deposit can be foreclosed after six months.
MONTHLY INCOME SCHEME
Tenure: 5 years
Interest rate: 8.4%
* Minimum deposit Rs 1,500 and maximum of Rs 4.5 lakh.
* Interest flows into savings account at the same post office.
* It can be foreclosed after one year with a 2% deduction.
* After three years, the deduction is 1%.
SENIOR CITIZENS' SAVING SCHEME
Tenure: 5 years
Interest rate: 9.2%
* It is open to investors above 60 years. The retired or those who have taken VRS can join at 55.
* There is a maximum limit of Rs 15 lakh per individual.
* Investments are eligible for deduction under Section 80C.
* Can be foreclosed after one year with 1.5% deduction. After two years, the deduction is 1%.
* The interest is paid out quarterly.
* Can be extended for 3 years on maturity.
PUBLIC PROVIDENT FUND
Tenure: 15 years
Interest rate: 8.7%
* There is a minimum deposit of Rs 500 and maximum of Rs 1 lakh in a year.
* Investments are eligible for deduction under Section 80C.
* The interest earned is tax-free.
* Account can be extended by five years on maturity.
* Withdrawals allowed after sixth year.
NSCs
Tenure: 5 - 10 years
Interest rate: 8.5 - 8.8%
* There is a minimum investment of Rs 100.
* Investments are eligible for deduction under Section 80C.
* Income accrued every year is treated as reinvestment and is eligible for tax benefits under Section 80C.
* There is no TDS, but income is fully taxable.
Other financial services offered by the post office
Money transfer
It offers wire transfers and international money orders, besides issuing traveller's cheques and 22 foreign currencies to foreign travellers. It also offers prepaid forex cards in seven currencies, demand drafts in 11 currencies and wire transfer in 13.
Right now, the NPS facility is available at nearly 800 branches across the country. The NPS is a lowcost retirement plan. It is also portable and can be accessed from any part of the country.
Mutual funds
A qualified mutual fund adviser is available at designated branches of the post office. An investor can submit application forms, payment cheques and KYC documents at these branches. However, the facility has not taken off due to removal of entry load.
Life insurance
Postal Life Insurance is open only to employees of the Central and state governments, public undertakings and semi-government organisations. The Irda has allowed the post office to sell insurance policies of private companies.
Commercial banking
India Post is among the 36 companies that have applied for banking licences. The launch of commercial banking operations could pitchfork the post office to the forefront of financial services in India.
economictimes.indiatimes.com
