MIS offers higher returns than some bank FDs; here's all you need to know

India Post, the operator of postal system in the country, offers the option of opening Monthly income scheme (MIS) account. This scheme, like other post office schemes, is recognised and validated by the government. The interest in this case is disbursed monthly, which is guaranteed.

MIS is best suited for conservative investors, say experts.

While fixed deposit has always been the preferred choice for many investors, MIS at this point is offering higher interest rate than most bank fixed deposits FDs.

Lately, several banks have reduced their FD rates in tandem with RBI's repo rate cut.

Currently, the interest rate offered by Post Office MIS is 6.6 percent per annum and its maturity period is 5 years. On the other hand, SBI offers an interest rate of 5.40 percent on FDs of up to Rs 2 crore for a tenor of 5 years.

MIS  account can be opened through cheque or cash. In case of cheque, the date of realisation of cheque in government's account is the date of opening of account.

Investors can open any number of MIS accounts in any post office subject to maximum investment limit by adding balance in all accounts

The maximum investment limit is Rs 4.5 lakh in a single account and Rs 9 lakh in a joint account. The investment must be done in multiples of Rs 100.

Interest can be drawn through auto credit into savings account standing at same post office, through post dated cheques (PDCs) or electronic clearance service (ECS). In case of MIS account standing at Core Banking Solution (CBS) post offices, monthly interest can be credited into savings account standing at any CBS post offices.

The MIS account can be prematurely encashed after one year but before three years at the discount of 2 percent of the deposit and after three years at the discount of 1 per cent of the deposit, according to India Post. Discount, here, means deduction from the deposit.