Interest Rates of Post Office Schemes (April-June 2020)
Government slashed Post Office Schemes Interest Rates significantly on March 31, 2020 like the interest rate cut announced for Small Savings Schemes. In this article you will find the Interest Rates on Post Office Schemes for Q1 FY2020-21 (April-June). These interest rates are as on last updated by the Department of Post.
Postal savings systems provide depositors who do not have access to banks a safe and convenient method to save money. Many nations operate banking systems involving post offices to promote saving money among the poor. Post Office, the Department of Post (India Post) offers many services to the Indian population.
Schemes under Post Office :
- Post Office Recurring Deposit (RD)
- Post Office Time Deposit (TD)
- Post Office Monthly Income Scheme (MIS)
One can open an account in these schemes at any head or general post office.
The interest rate of POST Office schemes are set by the government at the start of each quarter in a financial year. They are aligned with the government security rates. But, the interest rate will remain unchanged for the investor (depositor) once the deposit is made.
1. Post Office Recurring Deposit (PORD)
- The interest is compounded every quarter, which ensures that a sum of money multiplies by the time it matures. Interest rates on recurring deposits are fixed when you open the deposit.
- Interest Rates of Post Office RD scheme have been brought down by 140 bps from 7.2% to 5.8% for the 1st quarter of FY2020-21 (April-June) which is compounded quarterly.
- Interest is payable annually but is calculated quarterly.
- The following are the different interest rates for different durations:-
- 1 year – 5.5% per annum
- 2 years – 5.5% per annum
- 3 years – 5.5% per annum
- 5 years – 6.7% per annum
- The interest rates are higher compared to other fixed income investments like FD. Interest earned is payable monthly. These returns are called as fixed monthly income.
- The interest rate for Post Office Monthly Income Scheme (POMIS) is slashed by 100 bps from 7.6% to 6.6% per annum for 1st quarter of FY2020-21 (April-June).