Monthly income schemes have become a popular investment option for many due to multiple benefits, including low-risk, capital protection, affordable deposit amount, guaranteed returns, and others. Two of the most popular monthly savings schemes among investors are those offered by the State Bank of India (SBI) and the Post Office.
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Here's a comparison between the two
Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme is a Centre-run small savings scheme that allows investors to save a specific amount every month. The rate of interest for these accounts is fixed by the Central government every quarter depending on the returns yielded by government bonds during the same period. For the July-September quarter (FY 2022-22), the interest rate has been set at 6.6 percent. However, this scheme doesn’t come under Section 80C of the Income Tax and is subjected to taxation.
Any Indian citizen above the age of 10 years can open a POMIS account. The maturity period of the scheme is five years (60 months) from the account opening date. The minimum limit for the amount of deposit in the Post Office MIS plan is Rs 1,000 while the maximum investment allowed in POMIS is Rs 4.5 lakh in case of a sole-operated account.
In comparison, a maximum of Rs 9 lakh can be invested in POMIS is allowed in case of joint holders (up to three joint holders). However, there is no limit on the number of accounts held by individuals.
If there is a premature withdrawal before three years of account opening, there is a 2 percent deduction on the deposit. In case, there is a premature withdrawal after three years of account opening, a 1 percent deduction is made on the deposit.
SBI monthly income scheme
India’s largest public-sector bank State Bank of India (SBI) also offers a monthly income scheme called the SBI Annuity Deposit Scheme. The scheme enables users to make one-time lump sum deposits and receive repayment of the amount in monthly annuity installments. This installment comprises part of the principal amount plus interest. The maturity periods available under the SBI annuity deposit scheme are three years, five years, seven years, and 10 years. In case of a depositor's death, premature payment is allowed without any limit.
A major benefit of the scheme is that it allows an individual to avail of a loan or an overdraft facility for up to 75 percent of the remaining principal balance. While there is no upper limit for the maximum deposit amount under this scheme, customers are required to deposit a minimum of Rs 25,000 in the SBI annuity deposit scheme. The scheme offers a return of 5.3 percent for the general public and 5.8 percent for senior citizens. Also, the interest rate payable to SBI staff and SBI pensioners is 1 percent above the applicable rate.
ALSO READ: Sukanya Samriddhi Yojana: All you need to know about the perfect savings scheme for girl child
(Edited by : Sudarsanan Mani)
First Published: Jul 21, 2022 11:34 AM IST
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