Monday, July 22, 2013

Top 7 Financial Products Offered By Indian Post Office

 The financial market has been persistently changing. With increased number of banks, financial institutions and online facilities, there have been ample options through which one can invest their money into.
However, the Indian Post Office has been such an institution since very long time. The savings scheme and other financial products are a favourite with investors. The telegram and postage stamps may have gone out of fashion, but the financial services offered by the Indian Post Office are still very much in demand. And if the India Post bags the banking license, it could be a financial powerhouse with its 1.55 lakh branches across the country.

Read on to know top 8 financial products offered by the India Post, listed by Economic Times.

1. Recurring Deposit Tenure: 5 years
Interest rate: 8.3 Per cent

The Recurring Deposit Account can be opened by cash/cheque and in case of cheque the date of deposit shall be date of presentation of cheque. On maturity, the term can be extended up to 5 years. Apart from these facilities the account holder can appoint a nominee at the time of opening and also after opening of an account. Account can be transferred from one post office to another and any number of accounts can be opened in any post office. In case the account holder deposits 6 instalments in advance, they are also entitled with a rebate. Investor is also given a flexible window of up to 15 days to deposit the sum.

2. Senior Citizens’ Saving Scheme
Tenure: 5 Years
Interest Rate: 9.2 Per cent

An individual of the Age of 60 years or more may open the account. Individuals taking superannuation or VRS can also open an account, but the account should be opened within one month of receipt of retirement benefits.

The maturity period is 5 years and the account can be opened by cash for the amount below 1 lakh and above by cheque only. The depositor can operate more than one account in individual capacity or jointly with spouse (husband/wife). Interest can be drawn through auto credit into savings account standing at same post office, through PDCs or Money Order.

The maximum amount limit per individual is 15 lakh and the investments are eligible for deduction under Section 80C

3. Public Provident Fund Tenure: 15 years
Interest rate: 8.7 Per cent

An individual can open an account with minimum deposit of 500 in a financial year and maximum 1, 00,000 and account can be opened by cash or cheque. Deposits qualify for deduction from income tax under Sec. 80C of IT Act. The interest earned on the deposits is completely tax free. From the third financial year loan facility available but premature closure is not allowed before 15 years.

4. Money Transfer

The Money Transfer facility provides a fast and easy way of transferring personal payment from abroad to beneficiaries in India. The service is valid only for the purpose of remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS.

The collaboration between the Department of Posts, Government of India with the Western Union Financial Services and MoneyGram International facilitates instantaneous remittance of money from around 195 countries, 22 foreign currencies and territories to India.

5. Commercial Banking

The Department of Post submitted application before the Reserve Bank for a license to offer full-fledged banking services. The India postal network has 1,54,822 post offices in the country. Of these, 1,39,086 are in rural areas and 15,736 are in urban regions. There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network.

The Department of Post (DoP) has plans to start 50 bank branches in the first year and scale it to a total of 150 branched in 5 years, reported PTI. The Post Banks are proposed to be owned by DoP but with a completely independent board, governance structure and operations. It will have representation from Ministries of Finance and Communication & IT.

6. NSCs
Tenure: 5 - 10 years
Interest rate: 8.5 - 8.8 Per cent

The scheme is specially designed for government employees, businessmen and other salaried classes who are Income Tax assesses. There is no fixed limit of investment and no tax deduction at source. The certificates can also be used as collateral security to get loan from banks. Investment up to 1, 00,000 per annum qualifies for IT Rebate under section 80C of Income Tax Act. The rate of interest is 8.50 per cent.

7. Life Insurance

Postal Life Insurance is a contract entered into by the Government to pay a given sum of money on the death of an individual to his nominee or himself, if he survives that period. The scheme is only for Government and Semi-Government employees and it is the only Insurer that offers low premium and high bonus.

The Insurant can deposit the premium by the Premium Receipt Book. Deposits of premium can be done in any departmental PO, and there is a facility of recovery from pay for all employees belonging to the Central Government.


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