Post Office Fixed Deposit: Interest Rate, Tenure and More

One of the largest postal service networks in the world, India Post, also functions as a bank. The Post Office’s savings products serve the investment requirements of millions of Indians. One of the most popular savings products that the Post Office offers is the fixed deposit scheme. Post Office FD or National Savings Time Deposit was introduced by the Government of India on 12th December, 2019. Being a government-backed scheme, it is considered to be one of the safest investment options. 

However, many investors are unaware that the post office also offers two types of fixed deposits.

The National Savings time deposit and the National Savings Monthly Income Account have many features similar to fixed deposits offered by banks and NBFCs. You need to make a lump-sum deposit for a fixed tenure of time of your choice. You will receive interest as per a fixed income rate. In this blog, you will learn about the unique features, the Post office FD interest rate, and the benefits of this scheme.

Types of Post Office Fixed Deposit Schemes

National Savings Time Deposit Account (TD)

The National Savings Time Deposit Account allows you to open a deposit for one, two, three, and five years. The fixed deposit interest rates offered by the post office vary  based on your tenure. The five-year tenure fixed deposit offered by the post office also qualify for  tax deduction of up to Rs 1.5 lakhs under Section 80C. You can also open a fixed deposit either as a single account holder or a joint account with up to three account holders.  

National Savings Monthly Income Account (MIS)

This type of fixed deposit offers you the opportunity to earn a monthly income, and the tenure is for five years. The minimum deposit amount is Rs 1,000, and additional deposits can be made in multiples of Rs 1,000. The maximum deposit is Rs 4.5 lakhs for a single account and Rs 9 lakhs for a joint account. Interest is payable at the end of the month until maturity, and it is taxable as per the account holder’s tax slab. This type of fixed deposit is suitable for those who wish to earn a monthly income.

Features of Post Office Fixed Deposits

The interest on Post Office fixed deposits is predetermined and guaranteed. This implies that on the day of investment, you will know how much maturity and interest amount you will receive at the end of the tenure. Here is a snapshot of the unique features of the post office FD. 

Also Read: Experience financial growth with unmatched Bajaj Finance FD Rates

Post Office FD Interest Rates

For the first quarter of FY24 (April to June 2023), the government has hiked interest rates on Post Office Fixed Deposits. Here is a snapshot of current interest rates for the National Savings Time Deposit Account: 

The current interest rate for the National Savings Monthly Income Account is 7.4%. 

Key Things to Note about Post Office FD Interest Rate:

1. The interest for the National Savings Time Deposit Account is compounded quarterly and payable annually at the end of each year 
2. Where the interest contains part of a rupee that is fifty paisa or more, it shall be rounded off to one complete rupee and if such part is less than fifty paisa, it shall be ignored. 
3. The interest rate at the time of opening the deposit will be applicable for the entire tenure of FD
4. If the date of payment of the interest amount is a non-working day then the interest will be paid on the next working day.
5. No additional interest shall be payable on the amount of interest that has become due for payment but not withdrawn by the account holder.
6. You can opt for payment of the interest amount directly to your savings account. 

Documents Required to Open a Post Office FD Account

If you are looking to open a National Savings Time Deposit Account, then you need to submit at least one document in each category as follows, along with two passport-size photographs:

• Proof of identity: Passport, Aadhaar Card, Voter ID, Driving license, PAN card
• Proof of address: You can show utility bills such as electricity bills, Passport, Driving License 

If you do not have access to the above documents, you can also show an NREGA Job card with the signature of the State Government official or a letter issued by the National Population Register containing details of your name and address.

How to Invest in Post Office FD

You can visit your local post office branch to open a fixed deposit. You will need to offer all Know Your Customer documents, fill out the requisite form, and either pay the principal amount by cash or cheque.

You can also open an account online by registering at the Post Office’s internet banking portal at ebanking.indiapost.gov.in. Then log in with your registered ID and password. Under the ‘General Services’ tab, click on ‘Service Request’. Next, click on ‘New Request’, choose Post Office Fixed Deposit or Time Deposit opening, and follow the directions to open the account.

Final Thoughts

Post office fixed deposits are an effective saving mechanism as there is minimal risk of principal loss due to sovereign guarantee from the central government. You can put in a lump sum and enjoy a guaranteed yearly or monthly income  as per your requirement. This is a step toward diversifying your portfolio and balancing risk with a secure government-backed instrument that  offers guaranteed returns. 

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