indian post office fd rates

Post Office FD: Check Post Office Fixed Deposit Rates for 2020

Indian financial market offers several investment instruments. An individual can select from a long list of options including their risk-appetite and financial requirement.

These range from high-risk options like market dependent instruments to low-risk assured return instruments like fixed deposits.

  • As of 2017-2018, fixed deposits contribute to a total of 57.7% of the total investment instruments availed in India.

Fixed deposits are one of the most popular investment options in India courtesy an attractive rate of interest along with guaranteed returns. These are offered by various financial institutions, as well as other Government bodies like Indian Postal Services.

Post office fixed deposit scheme

Post office time deposit account is one of the Post Office savings schemes offered to prospective investors across India. This investment instrument is ideal for risk-averse individuals.

Offered against a sovereign guarantee from the Government of India, time deposit accounts ensure guaranteed returns against a flexible investment tenor ranging from 1,2,3, and 5 years fixed deposits.

Other than that, post office time deposit accounts also offer a competitive rate of interest for wealth accumulation. Let’s take a look at the post office fixed deposit interest rates.

Post office time deposit account interest rate

The tenor of an FD affects its interest rate, as the rate of a time deposit account changes depending on the investment tenor selected by a particular customer. Here is a breakdown of the applicable interest rates as of 1st July 2019.

  1. Customers can opt for a 1 year, 2 years, or 3 years fixed deposit, which will accumulate interest gains at a rate of 6.9% per annum.
  2. An interest rate of 7.7% per annum is applicable for fixed deposit with a tenor of 5 years.

Interest is calculated quarterly every year, although, it is credited on an annual basis.

Benefits of a post office fixed deposit

The post office savings scheme offers several benefits to investors, especially to individuals with a low-risk appetite. This savings scheme is tailor-made to cater to a wide range of individuals; its customer-centric policies are the following.

  1. Post office time deposit account can be opened with as low as Rs.1,000, which makes it ideal for investors hailing from various socio-economic classes. Contrastingly, no maximum investment limit makes it ideal for individuals who want to invest a large sum for asset appreciation.
  2. Post office fixed deposit can be opened by a single adult or minor above 10 years of age, in which case a legal guardian is required to operate the account. One can also opt for a joint account, in which case a maximum of 3 individuals will be able to benefit from this post office savings scheme. Moreover, single accounts can be converted to joint accounts and vice versa.
  3. Investors can avail the nomination facility on a post office fixed deposit. It allows safeguarding of funds in case of accidental demise of an individual. Nomination facility can be availed while opening, or after opening an account.
  4. Time deposit accounts with an investment tenor of 5 years are eligible for tax exemption on the principal amount under Section 80C of the Income Tax Act, 1961.
  5. An investor can open any number of accounts in any post office across India. He or she can also transfer the accounts from one branch to another.
  6. Investors have the option to receive the interest accumulated annually in their savings account. It can prove helpful for retired individuals as a steady source of income from their accumulated funds.
  7. Customers also have the option to extend the time deposit account by simply submitting an application. This facility is useful for higher wealth accumulation over a longer investment period.
  8. Premature liquidation is allowed after a minimum lock-in period of 6 months. However, premature withdrawal of fixed deposit is not financially advisable as it prevents the investor from reaping the complete benefits from this post office savings scheme.

On the contrary, there are certain financial institutions that offer loans against fixed deposits, allowing an individual to mitigate their financial requirements without liquidating their investment. Such features are available with Bajaj Finance Fixed Deposits, and customers can avail as much as Rs.4 lakh as a loan.

Post office fixed deposits also offer online account opening facility, with the integration of net banking and intra-operability via mobile banking. It has also simplified the application process, helping an individual save time during applying.

Knowing the above-mentioned details is essential to learn about a fixed deposit, one of the most preferred post office savings scheme. Prospective customers will be able to reap the maximum benefit from this investment instrument if they understand the details regarding the fixed deposit and invest accordingly.

Author Bio:

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight story.

About blogger2020

I am working in a well-known financial and tech advisor with the abilities to keep a track and predict the market trends with the utmost accuracy. My extensive knowledge in finance and tech is remarkable as she has worked on different financial and sectors dealing with the entire range of loans. I am also an expert in writing many finances and tech-related articles and blogs, so I am a renowned finance blogger too.

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