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The main financial services offered by the Department of Posts are the Post Office Savings Bank. It is the largest and oldest banking service institution in the country. The Department of Posts operates the Post Office Savings Scheme function on behalf of the Ministry of Finance, Government of India. Under this scheme, more than 20.50 crores savings account are operated. These accounts are operated through more than 1,54,000 post offices across the country
The Post offices provide a number of savings schemes like the Savings Account Schemes, Recurring Deposit Schemes, Time Deposit Schemes, Public Provident Fund Schemes, Monthly Income Schemes, National Savings Certificates, and Senior Citizens Savings Scheme. A brief of the various schemes is as follows:
Types of Schemes :
1) National Saving Certificates (NSC)
National Savings Certificate, popularly known as NSC is an assured investment scheme. It is a time-tested instrument providing double benefits; one is tax savings and the other is adequate returns with high safety. They facilitate long-term safe saving options for the investor. NSCs are a good investment option for salaried class people, businessmen as well as government employees. When you buy a NSC for a particular value, the interest compounded is returned along with the principal amount only after the maturity. It is a cumulative scheme wherein the interest is reinvested. The duration for an NSC is 6 years. Owing to it being time-bound, NSCs have low liquidity.
NSCs are available at all post offices across the country. They are issued by the Department of Post. Many middle class people in the country buy NSCs for saving tax as well as to earn decent return on their investment. Though NSC has much competition from other investment options like shares and mutual funds, yet it is highly popular owing to its respectable returns which are government guaranteed as well as can be used for saving Income tax.
2) Post Office Time Deposit Scheme
Post Office Time Deposit Scheme is a scheme offered by the department of Post, Government of India. This is a type of fixed deposit and is offered at all post offices. As this scheme is handled directly by the Government of India through Post Office network, it can be considered a very safe and secure method of investment. The amount grows at a predetermined rate at no risk.
This scheme is best for those people who want to invest their lump-sum money for a fixed period of time. At the maturity of the deposit, the depositor gets the total amount, (principal + interest). The rate of interest on investment is high in this scheme ranging from 6.25% to 7.50%, depending on the term of the deposit. The interest is calculated on quarterly basis but is payable annually.
3) Post Office Recurring Deposit Account (RDA)
A Post-Office Recurring Deposit Account (RDA) is a banking service offered by Department of post, Government of India at all post office counters in the country. The scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum after five years. The scheme, a systematic way for long term savings, is one of the best investment option for the low income groups.
4) Post Office Monthly Income Scheme
The post-office monthly income scheme (MIS) provides for monthly payment of interest income to investors. It is meant for investors who want to invest a sum amount initially and earn interest on a monthly basis for their livelihood. The MIS is not suitable for an increase in your investment. It is meant to provide a source of regular income on a long term basis. The scheme is, therefore, more beneficial for retired persons.
5) Post Office Senior Citizen Scheme
A new savings scheme called ‘Senior Citizens Savings Scheme’ has been notified with effect from August 2, 2004. The Scheme is for the benefit of senior citizens and maturity period of the deposit will be five years, extendable by another three years. Initially the scheme will be available through designated post offices throughout the country.