PROJECT REPORT

ON
COMPARITIVE STUDY BETWEEN DIFFERENT POST
OFFICE SAVING SCHEMES IN INDIA
BBA (H)

SUBMITTED BY

SUPERVISED BY

PRAKHAR D

ANITA NANDI

MITTAL

BARMAN

BBA (H)

PROF. BBA (H)

1072116

ACKNOWLEDGEMENT
1

I am thankful for the assistance received from various individuals in making this
project successful. I find no words to express my gratitude towards those who are
constantly involved with me throughout my project in
My special thanks to Mr. Soumen Chatterjee (HOD, DOMS) who has given us the
opportunity to work on such interesting project and had enabled us to know and
learn a lot and gain remarkable experience.
I would like to give my special thanks and regards to Mrs. Anita Nandi Barman
who has helped me to carry out this project as my project in charge under her
guidance and blessing I was able to fulfill the requirements of my university.

Prakhar D Mittal
BBA (H)
1072116

_______________

______________

Mentors signature

Students signature

CONTENTS
Sr.
No.

PARTICULERS

Introduction

Literature Review

Need of Study

Scope of Study

Objective of Study

Research Methodology

Analysis

Findings

Bibliography

INTRODUCTION
3

Page
No.
4-7

8-11
12
13
14
15-18
19-28

29-42

43

Indian Postal Service-

Department of Posts

Type

Agency of the Government of India

Founded

1764

Headquarters

New Delhi, India

Key people

Radhika Doraiswamy, Director General

Industry

Postal system

Employees

520,191 (As of 2007)

Website

http://www.indiapost.gov.in/

The Department of Posts (Hindi: ) functioning under the brand

name India Post (Hindi: ) , is a government operated postal system in
India; it is generally referred to within India as "the post office".

Postal Services in India

India possesses the largest postal network in the world with 155,000 post offices
spread all over the country as on March 31, 2001, of which 89 per cent are in the
rural sector. Post offices in India play a vital role in the rural areas. They connect
these rural areas with the rest of the country and also provide banking facilities in
the absence of banks in the rural areas. They come under the Department of Posts
4

which is a part of the Ministry of Communications and Information Technology

under the Government of India. The apex body of the department is the Postal
Service Board. The board consists of a chairman and six members. The six
Members of the Board hold portfolios of Personnel, Operations, Technology,
Postal Life Insurance, Human Resource Development (HRD) and Planning
functions. The Joint Secretary and Financial Advisor to the Board is also a
permanent invitee to the Board.
India has been divided into 22 postal circles, each circle headed by a Chief
Postmaster General. Each Circle is further divided into regions comprising field
units, called Divisions, headed by a Postmaster General. Other functional units
like Circle Stamp Depots, Postal Stores Depots and Mail Motor Service may exist
in the Circles and Regions. Besides the 22 circles, there is a special Circle called
the Base Circle to cater to the postal services of the Armed Forces of India. The
Base Circle is headed by an Additional Director General, Army Postal Service
holding the rank of a Major General. The modern postal service in India is more
than 150 years old. In 1854, the Post Office in the Province of Sindh, (then in
British India), made postal history, when India became the first country to issue
postage stamps. In October 1854, all the post offices of Indian sub continent came
under centralized control. In the same year Railway Mail Service was established
and India had a network of 701 post offices across the continent. In 1911, India
achieved another "first" when a biplane from Allahabad to Naini flew with 6500
pieces of mail. The flight was the first official Air Mail in the world. After
independence, the Indian government broadened the vision of the postal system to
reach the entire population of the country. Today Indian postal system has a reach
that ranges from arid deserts of Rajasthan and Kutch to the icy heights of
Laddakh. India has the highest post office in the world in Sikkim at a height of
15,500feet (postal code - 172114). Indian postal service provide many facilities
like - general or registered mail, parcel post, speed post, express post, e post and
special courier service known as EMS-speed post. They also offer a number of
post office savings schemes like National Savings Certificate, Kisan Vikas Patra,
Recurring Deposits and Term Deposits.
Post Office has long served as the backbone of communication and small
deposits. For more than 150 years the department of Posts has played a pivotal
role in facilitating communication throughout the nation thereby aiding in socioeconomic development of the country.
Post Offices offer varied services. Their work is not just restricted to delivering
mails. They accept deposits, provide retail services like sale of forms, bill
collection etc, provide savings schemes, life insurance cover etc.
With a network of more than 1.5 lakh post offices across the country, India Post
offers various Post Office Saving Schemes. These are risk free investment options
that are safe and secured and provide you with capital gains without Tax
Deduction at Source (No TDS).
5

Various investment opportunities are available for an individual to his savings and
he can choose the appropriate investment schemes, which suit his needs. There
are different types of opportunities provided by many financial institutions like
commercial banks, co-operative banks, post office savings banks, life insurance
corporation public limited company. Of all the above mentioned institutions, Post
Office Savings Bank play vital role. It provides numerous benefits to the
investors. Post office saving bank is the largest savings institutions in the country.
With a view to mobilizing savings of people with relatively small income and
circulating in them a spirit of thrift and savings, the Central Government has
endeavored to make the National Savings Movement popular by offering high
returns than those given by scheduled banks. There are a number of attractive
schemes, well designed to meet the individual requirements of different investors.
Tax saving features of those schemes attracts the higher income groups more than
small savers.
The investment avenues provided by the post offices are generally marketable as
they are saving media. The major instruments of post office schemes enjoy tax
benefits such as exemption of investment contribution or interest income from tax
or both up to certain limits.
These savings schemes come at attractive rates with nomination facility and are
transferable to any Post Office across India. Let us have a quick glance at various
post office savings schemes.
The Government of India had framed various saving schemes with the objective
to provide fully secured and attractive investment opportunity to the public. Its
another main purpose is to mobilize huge resource to the government exchequer
for the development of the country. These post office schemes are attractive to the
public as they offer good tax benefit and higher returns. These schemes were
framed under the Government Savings Bank Act, 1873, Government Savings
Certificates Act, 1959 and Public Provident Fund Act, 1968.
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

Types of Post Office Saving Schemes

6

Post Office Monthly Income Scheme- Post Office Monthly Income Account is
meant for those investors who want to invest a lump sum and earn interest on
monthly basis for their living.
Public Provident Fund -Public Provident Fund, popularly known as PPF, is a
savings cum tax saving instrument. It also serves as a retirement planning tool for
many of those who do not have any structured pension plan covering them.
National Savings Certificate -National Savings Certificate, popularly known as
NSC, is a time-tested tax saving instrument that combines adequate returns with
high safe.
Post Office Saving Account -Post office saving account is similar to a savings
account in a bank. It is a safe instrument to park those funds, which you might
need to liquidate fully or partially at very short notice.
Post office time deposit -Post office time deposit account is just like the bank
fixed deposit account. These time deposits are meant for those investors who want
to deposit a lump sum for a fixed period.
Senior Citizens Savings Scheme -Offers fixed investment option for senior
citizens for a period of five years, which can be extended, at a higher rate of
interest that are paid in quarterly installments.
Recurring deposit account -Recurring deposit account is a systematic way of
saving money. The scheme is meant for those investors who want to deposit a
fixed amount regularly or periodical basis.

Review of literature
The views expressed by various authors have been reviewed in a broad sense so
as to confine itself for reference.

Dr.R.Ganapathi (2010) studied that various Small Saving Schemes were

mainly meant to help the small investors and also those who are in high tax
brackets. The study concluded that proper advertisements must be made for Post
Office Savings Schemes, so that even a layman could know about these Schemes
and deposits can be increased. They stated that investing their amount in Post
Office deposits provides safety and security for the amount invested.

Preeti Singh (2002) stated that Post office schemes are generally like the
Commercial Bank schemes. They have a saving account, a Recurring Deposit
account, Time Deposit account which is also recurring in nature. The savings
account operates in the same way as commercial Banks through cheques and there
is no restriction on withdrawals.

Karthikeyan (2001) has conducted research on Small Investors' Perception on

Post Office Saving Schemes and found that there was significant difference
among the four age groups, in the level of awareness for Kisan Vikas Patra
(KVP), National Savings Schemes (NSS), and Deposit Scheme for Retired
Employees (DSRE), and the overall score confirmed that the level of awareness
among investors in the old age group was higher than in those of the young age
group. No difference was observed between male and female investors except for
the NSS and KVP. Out of the factors analyzed, necessity of life and tax benefits
was the two major ones that influence the investors both in semi-urban and urban
areas. Majority (73.3 per cent) of investors of both semi-urban and urban areas
were very much willing to invest in small savings schemes in future provided they
have more for savings.

Gavini and Athma (1999) found that social considerations, tax benefits, and
provision for old age were the reasons cited for saving in urban areas, whereas to
provide for old age was the main reason in rural areas. Among the post office
schemes, Indira Vikas Patra (IVP), KVP and Post Office Recurring Deposit
Account (PORD) were the most popular, in both urban and rural areas.

Jayaraman (1987) has stated that instead of issuing special bonds for
unearthing black money the Government of India can encourage investment of
black money in various small savings schemes. He further stressed the need to
draft the assistance of voluntary agencies at the school and college level for
further mobilization of savings.

Arangasami (1992) has observed that more and more dependence on

8

mobilization of resources through small savings will ensure and promote selfreliance. He concluded that the Central government should give proper assistance
and encouragement to the small savings agencies, which will be useful not only in
mobilization of funds but also for the economic development.

The study by Mukhi (1989) has revealed that NSC has been one of the most
popular tax savings instruments in this country. He has stated those contractors
and others who have to provide security while bidding for contracts finds it
extremely convenient to buy NSC and pledge these to the appropriate authorities
while earning 12 per cent per annum on the pledged securities. He also stated that
the major attraction of NSC is its simplicity. Even the average investor does not
have to scratch his head to understand the scheme.

Tamilkodi (1983) has stated that small savings schemes have a psychological
appeal and it provides an opportunity for ordinary men, women, and even children
to park their savings. It reaches a large number of people and covers a wide range
of areas. She also suggested that efforts should be taken to simplify the procedure
of small savings schemes to suit the needs of illiterate and socially downtrodden
people. Further, she suggested an increase in the rate of interest of small savings
schemes to meet the challenges of commercial banks.

Somasundaram (1998) has found that bank deposits and chit funds were the
best known modes of savings among investors and the least known modes were
Unit Trust of India (UTI) schemes and plantation schemes. Attitudes of investors
were highly positive and showed their intention to save for better future. Nearly
two-thirds of the investors were satisfied with their savings. Both income and
expenses of a family influenced the level of satisfaction over savings. A large
proportion of investors were concerned about their children's well-being. Among
the dissatisfied investors, majority were of the opinion that cost of living was too
high. The most common mode of investment was bank deposits. However, a shift
was noticed from bank deposits to other forms of investment. Almost all the
investors had invested in gold and silver. Among several parameters in investing,
safety of money was considered to be the most important element. Next, the
investors expected regular return from their investments.

Richa (2004) in her study argued that the Post office continues to be a major
attraction for savers. Finance Ministry officials say that the attraction for the Post
office deposit schemes stems from the higher interest rate they offer vis--vis
what banks give.

Scher (2001) observed that in many countries Postal Savings and Giro
remittances have long enabled provision of financial services to all segments of
9

the population. Questionnaires were sent to the Ministers and Postal

administrations of approximately 80 countries in July 1999. The review of
experiences of Asian developing countries suggests many ways by which
developing countries can help themselves to mobilize domestic savings and
provide domestic financial services through postal savings and remittances and
thereby provide financial services to those most likely to be excluded.

Amling Ferderic stated that investment is the employment of funds with aim
of achieving additional income of growth in value. The essential quality of
investment is that it involves waiting for a reward. There are a number of
investment possibilities that prospective investors can think of.

Monograph stated that the different types of small saving include the national
saving certificate, the post office saving bank deposits and the post office cash
certificate. Individuals saving in the since they are a liquid as other deposits form
of Post Office saving bank deposits should be treated on a par with other bank
deposits

Investors Voice opines that post office investors belong to a separate class. It
has been recognized that the post office savings schemes is the oldest in the
country; are the safety investment avenues and hence attract those classes of
investors like senior citizens house wives ,institutions trust etc. The post office
savings schemes are relatively inflexible but those who do don`t care much of risk
reward equation have traditionally been plumbing for the post office saving with
the sole criterion of the security of investment.

National Council of Applied Economic Research (NCAER) (1961)

'Urban Saving Survey' noticed that irrespective of occupation followed and
educational level and age attained, households in each group thought saving for
the future was desirable. It was found that desire to make provision for
emergencies were a very important motive for saving and importance was given
next to 'saving for old age'. Among motives for saving, provision for emergencies,
old age, and purchase of house occur with same frequencies in all occupational
and educational groups. The proportion of households expressing a preference for
financial assets increases with the level of education. The preference for financial
assets, especially bank accounts and small savings, while rising markedly with
education, does not seem to increase with income, except at the lowest end of
income distribution. Thus, it would appear that efforts must be taken to popularize
financial forms of savings particularly among the less educated members of
upper-income group. Profitability seems to be the most important motive for
determining saving preference. Safety is another significant consideration for
most people and liquidity ranked third.

Securities and Exchange Board of India (SEBI) and NCAER

10

(2000) 'Survey of Indian Investors' has reported that safety and liquidity were the
primary considerations which determined the choice of an asset. Ranked by an
ascending order of risk perception fixed deposit accounts in bank were considered
very safe, followed by gold, units of UTI-US64, fixed deposits of nongovernment companies, mutual funds, equity shares, and debentures. Households'
preference for instruments in which they commonly invested matched the risk
perception. Bank deposits, which had an appeal across all income classes and taxsaving schemes, were preferred by middle-income and higher-income groups.
There was a correlation between the income levels and investments of households
in market-related securities.

Need for the Study

The Indian economy is growing significantly and has various investment options
but the Government of India has provided the oldest investment option. Still, the
Postal saving scheme had not gained much importance. The changing postal
environment presents an enormous challenge for traditional postal businesses, but
it also creates a vast array of new business options and opportunities. The study
will be undertaken to analyze whether the Postal savings schemes have gained
importance among the people or not. Against this backdrop, an attempt will be
11

made to find out the investment pattern of the respondents of a rural area.
To know the customer perception in the post office saving scheme, it
contains different type of customers satisfaction level, their expectations and
interest. What kind of problems customers facing in post office. To know the
customers age, annual income, gender, and scheme type, this is the need to this
study.
The small saving schemes in India are framed by the Central Government under
the Government Savings Bank Act, 1873 and Government Savings Certificates
Act 1959 and the Public Provident Fund Act 1968. The two other schemes
intended to strengthen the domestic savings are Deposit Scheme for Retiring
Government Employees (1989) and Deposit Scheme for Retiring Employees of
Public Sector Companies (1991). Apart from these schemes, there are also the
contractual saving schemes, namely General Provident Fund (GPF), Employees
Provident Fund (EPF), and Employees Pension System. All these schemes carry
interest rates administered by the Central Government.
At present, the small saving schemes in operation include Post Office Savings
Account, Post Office Recurring Deposits, Post Office Time Deposits, National
Savings Certificate, KisanVikas Patra, Public Provident Fund, and Deposit
Schemes for Retiring Government Employees and Employees of Public Sector
Undertakings. The maturity period of the small saving schemes, currently in
operation, varies from a very short period (saving deposits) to over fifteen years
(PPF). Certain schemes such as Post Office Savings Account, Post Office
Recurring Deposits, Post Office Monthly Income Scheme, and Post Office Time
Deposits are similar to commercial bank deposit schemes. Schemes like National
Savings Certificates and Kisan Vikas Patra have maturity of 6 to 7 years. For
Public Provident Funds, the minimum initial maturity is 15 years while for
National Savings Schemes it is 4 years. Interest rates on the small saving scheme
are fixed by the Central Government from time to time. These were last revised
on March 1, 2001. An attractive feature of small saving schemes is favorable tax
treatment. While contributions to certain schemes carry tax concessions, returns
on almost all schemes have some tax-exemptions.

Scope of Study
The study aims to create awareness among the investors about various post
office deposits schemes. It helps working people to invest in various post
office deposits schemes and the National Savings Organization (NSO) and
the Post Offices to know the problems faced by investors in while investing
in post office deposits schemes. On basis of the study, the Government can
make suitable changes to promote the various post office savings schemes
according to the respective needs of the investors.
12

Hypothesis of the Study

Based on the above objectives, the following hypothesis will be postulated:
1. There is no significant association between sources of the awareness of Postal
Investments and Rural savings.
2. There is no significant association between Schemes of the awareness of postal
investments and Rural Savings.
3. There is no significant association between different types deposits of Postal
Investments and Rural savings.
4. There is no significant association between personal factors and source of
awareness of postal savings schemes.
5. There is no significant association between personal factors and media of
advertisement about Postal Investment and Rural savings.
6. The demographic factors of the respondents have no significant influence over
their sources of awareness of various Post Office Deposits Schemes.
7. The demographic factors of the respondents have no significant influence over
their opinion towards various Post Office Deposits Schemes.
8. The demographic factors of the respondents have no significant influence over
the problem faced while investing in Post Office Deposits Scheme

OBJECTIVES OF THE STUDY

The overall objectives of the study are to analyze the investors
attitude towards POST OFFICE DEPOSITS SCHEMES. The
specific objectives are -

To understand the perception of investors in the post office saving

schemes
13

 To study about investors expectation from the post office schemes

To find out the level of awareness of various schemes of Post office
among the public.

To find out the purpose of investments in various schemes of post office.

To study the problem faced by depositors in depositing in Post Office
Deposits Schemes.

To study the investors opinion regarding tax benefits and returns from
Post Office Deposits Schemes.

To find out the sources of awareness by which public get aware about
various schemes.

To study the relationship between the demographic factor and sources of

awareness, opinion and problem faced regarding Post Office Deposits
Schemes.

To know about the following schemes

Post Office Savings Account

5-YearPost Office Recurring Deposit Account
Post Office Time Deposit Account
Post Office Monthly Income Account
15-year Public Provident Fund Account
Kisan Vikas Patra
National Savings Certificate (VIII issue)
Senior Citizens Savings Scheme

Research Methodology

14

15

Small savings schemes are designed to provide safe & attractive investment
options to the public and at the same time to mobilize resources for development.
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 corers 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, Kisan Vikas Patras, and Senior Citizens Savings Scheme. A brief of
the various schemes is as follows:

Schemes
Post Office
Savings
Account

5-YearPost
Office
Recurring
Deposit
Account

Post Office
Time Deposit
Account

Investment
Interest
Salient
Tenure Denominatio
Rates
Features
ns and limits
Min: Rs. 50 Max:
3.5% p.a. On
No specific Rs. 1 lakh for
individual
Cheque facility
or fix
individual and 2
and joint
available
tenure
lakhs for joint
account
account
One withdrawal
up to 50% of the
balance is
5 years.
Min: Rs. 10 per
allowed after
7.5%
Can be
month or multiples one year. Full
compounded renewed for
of Rs. 5 Max: No maturity value
quarterly
another 5
limit
allowed on R.D.
years
6 & 12 months
advance deposits
earn rebate.

6.25%
6.50%
7.25%
7.50%

1 year
2 years
3 years
5 years

16

Min: Rs. 200 and Long-term

its multiple thereof accounts could
Max: No limit
be closed after 1
year for
discounted
interest.

Post Office
Monthly
Income
Account

8% p.a.

6 years

15-year Public 8% p.a.

15 years
Provident Fund compounded tenure
yearly
Account

Kisan Vikas
Patra

8.4%
--compounded
yearly.
Money
doubles in 8
years and 7
months

17

Accounts could
be closed after 6
months but
before a year for
no interest.
Account if
closed after 1
year but before 3
years will suffer
a deduction of
Min: Rs. 1500 per
2% of the
month or multiples
deposit. Account
of it.Max: Rs. 4.5
if closed after 3
lakhs for
years will suffer
individual account
a deduction of
and Rs. 9 lakhs
1% of the
for joint account
deposit. On
maturity, bonus
of 5% on
principal amount
is admissible
Withdrawal can
be made every
year after the 7th
Min: Rs. 500 in 1 financial year.
year Max: Rs.
From the 3rd
70000 in 1 year
financial year,
Deposits can be loan can be
made in lump-sum availed against
or 12 installments PPF.
No attachment u
nder court
decree order.
No limits.
A single holder
Investment
certificate can
denominations
be purchased by
available are of
an adult. A
Rs. 100, Rs. 500, certificate can
Rs. 1000, Rs.
also be
5000, Rs. 10,000, purchased
in all Post
jointly by two

National
Savings
Certificate
(VIII issue)

8% p.a.
compounded
half-yearly 6 years
but payable
after maturity

Senior Citizens
9% p.a.
Savings
Scheme

5 years

18

Offices and Rs.

50,000 in all
adults.
Head Post Offices.
Min: Rs. 100. Also
available in
A single holder
denominations of
certificate can
Rs. 100/-, 500/-,
be purchased by
1000/-, 5000 &
an adult.
Rs. 10,000/-. Max:
no limit
Age should be
above 60 years
or 55 years
above if retired
under
superannuation.
Account if
Only 1 deposit
closed after 1
allowed in
year will suffer a
multiple of Rs.
deduction of
1000. Max is Rs.
1.5% interest
15 lakhs
and after 2 years
will suffer a
deduction of 1%
interest. TDS is
made on interest
if it exceeds Rs.
10000 p.a.

ANALYSIS
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.

Features:

The minimum investment in a post-office RDA is Rs 10 and then in

multiples of Rs. 5/- for a period of 5 years. There is no prescribed upper
limit on your investment.

The deposit shall be paid as monthly installments and each subsequent

monthly installment shall be made before the end of the calendar month
and shall be equal to the first deposit. In case of default in payment, a
default fee is chargeable for delayed deposit at 0.20 Paisa per month of
delay, for Rs.10 Denomination. After more than four defaults, the account
shall be treated as discontinued in case the account is not revived within
two months from the fifth default.

For Advance deposits for 6 months or 12 months, a rebate is allowed at the

prescribed rate (For Rs 10 denomination:- Rs.1/- for 6 advance deposits,
Rs.4/- for 12 advance deposits.

One withdrawal is allowed after one year of opening a post-office RDA on

meeting certain conditions. You can withdraw up to half the balance lying
to your credit at an interest charged at 15%. The withdrawal or the loan
may be repaid in one lump or in equal monthly installments.

Premature closure is allowed on completion of three years from the date of

opening and in such case, interest is payable as per the rate applicable for
the Post Office Savings Bank Account.

After maturity of the account, it can be continued for a further period of 5

years with or without further deposits. During this extended period, the
account can be closed at any time.
19

Returns:
The post-office recurring deposits offer a fixed rate of interest, currently at 7.5 per
cent per annual compounded quarterly.

Monthly
Investment

Money
returned
Total
on
Investment(60months) Maturity
(after 60
months)

10

600

728.90

20

1,200

1457.80

50

3,000

3644.50

100

6,000

7289.00

500

30,000

36445.00

1000

60,000

72890.00

1375

82,500

100224.00

5000

3,00,000

364450.00

Advantages:
The post office offers a fixed rate of interest unlike banks which constantly
change their recurring deposit interest rates depending on their demand supply
position. As the post office is a department of the government of India, it is a safe
investment. The principal amount in the Recurring Deposit Account is assured.
Moreover Interest earned on this account is exempted from tax as per Section 80L
of Income Tax Act.

How to Start Post office RDA:

20

A post-office RDA can be opened at any post office in the country by filling up
the appropriate forms. The account can be opened by an individual adult as a
single person account, two adults in a joint mode, or by a guardian on behalf of
the minor who has attained the age of 10 years in his own name. A pass book is
issued at the time of opening the account. If there is a loss, theft or the passbook is
mutilated, a duplicate is issued on a charge. The deposit can be made personally at
the particular post office every month or can be made through an appointed agent,
who would collect the money from you and enter the same in your passbook.

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.
The various rates of interest received in a Post Office Time Deposit are:

Period of
Deposit

Rate of interest
per annum

1 Year

6.25%

2 years

6.50%

3 years

7.25%

5 years

7.50%

Opening a Post Office Time Deposit Account

The account can be opened at any of the post offices across India. It can be
opened for a period of 1 year, 2 years, 3 years or 5 years. On opening the account,
you will receive an account statement with the deposit amount details and

21

duration of the account. Once the account matures, the depositor receives the total
amount.
The minimum amount required to be deposited in the Post Office Time Deposit is
Rs. 200/- and multiples of it. There is no maximum limit. Nomination facility is
available under this scheme. The following persons can open a Post Office Time
Deposit Account:

A single person can open this account.

Two adults can open a joint account.

An adult can open an account on behalf of a minor or a person of unsound

mind.

Authority of Provident Fund, Superannuation Fund or Gratuity Fund can

open group accounts.

Fund controlling authority of Sanchayika can open an account.

Local authority can open a public account

The Treasurer of Charitable Endowments for India, Trust, Regimental

Fund & Welfare Fund could open institutional accounts

A cooperative society/bank or scheduled bank can open an account on

behalf of its members, employees or clients.

Gazette officer can open an account in his official capacity.

Withdrawal
No withdrawal is permitted for 6 months after the deposit. In case the depositor
closes the account after 6 months, but before 1 year, then he will get back the
principal amount without any interest. However, in some cases, some interest
could be received depending upon the time when it was deposited. In case the
duration of deposit is 2, 3 or 5 years and the depositor closes the account after 1
year, then the depositor will get 2% less than the interest rate applicable to the
period for which the deposit was initially made.

Tax Benefits

22

The interest received on a Post Office Time Deposit is tax-free under section 80L
of the Income Tax Act. Also, the amount invested in a 5-year Post Office Time
Deposit Account is eligible for deduction under section 80C of the Income Tax
Act. The investment in Post Office Time Deposit along with other investments
under Public Provident Fund, LIC, National Savings Certificate, ULIP etc are
eligible for deduction up to a maximum of Rs. 1,00,000/- under section 80C. In
case of joint account under this deposit, the deduction is allowed to the first
holder.

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.

Features:

Only one deposit is available in an account.

Only individuals can open the account; either single or joint.( two or
three).

Interest rounded off to nearest rupee i.e., 50 paisa and above will be
rounded off to next rupee.

The minimum investment in a Post-Office MIS is Rs 1,000 for both single

and joint accounts.

The maximum investment for a single account is Rs 3 lakh and Rs 6 lakh

for a joint account.

The duration of MIS is six years.

Returns:
The post-office MIS gives a return of 8% plus a bonus of 10 per cent on maturity.
However, this 10 per cent bonus is not available in case of premature withdrawals.

23

The minimum investment in a Post-Office MIS is Rs 1,000 for both single and
joint accounts.

Deposit
Rs

Monthly
Interest

Amount returned on
maturity

5,000

33

5,500

10,000

66

11,000

50,000

333

55,000

1,00,000

667

1,10,000

2,00,000

1,333

2,20,000

3,00,000

2,000

3,30,000

6,00,000

4,000

6,60,000

Advantages:
Premature closure of the account is permitted any time after the expiry of a period
of one year of opening the account. Deduction of an amount equal to 5 per cent of
the deposit is to be made when the account is prematurely closed. Investors can
withdraw money before three years, but a discount of 5%. Closing of account
after three years will not have any deductions. Monthly interest can be
automatically credited to savings account provided both the accounts standing at
the same post office. The interest income accruing from a post-office MIS is
exempt from tax under Section 80L of the Income Tax Act, 1961. Moreover, no
TDS is deductible on the interest income. The balance is exempt from Wealth Tax.

How to Open:
You can buy a post office MIS at any post-office in India. When you open an
MIS, you will get a certificate issued by the post office. In addition, the investor is
provided with a passbook to record his transactions against his MIS.

Kisan Vikas Patra (KVP)

Kisan Vikas Patra (KVP) doubles your money in 7 years and 3 months with the
advantage of premature withdrawal. KVP is sold through all Head Post
24

Offices and other authorized post offices throughout India. The rate of return is
9.75 per cent, compounded annually.
KVP accumulates money at a fixed rate, and your money doubles in 7 years and 3
months. But KVP is not meant for regular income. It is for those looking for a
safe avenue of investment without the pressing need for a regular source of
income.

Features:

The minimum investment in KVP is Rs 100. Certificates are available in

denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000, Rs 10,000 and Rs
50,000. The denomination of Rs 50,000 is sold through head post
offices only. There is no limit on holding of these certificates. Any number
of certificates can be purchased. A KVP is sold at face value; the maturity
value is printed on the Certificate.

It is a good option if you are looking for hassle-free investment as it

assures a certain sum of money at the expiry of the duration of your
investment.

With a fixed rate of return, KVP does not provide safeguards against the
perils of high inflation rates.

Depending on whether the finance company or the bank from where you
are raising the loan accepts it or not. Some banks accept it for raising
house loans.

Income is assured at the prescribed rate of interest. As mentioned, this is a

risk-free investment channel as the KVP comes with the backing of the
Government of India.

Since the KVP has the backing of the Government of India and is,
therefore, extremely safe, it does not require any commercial rating.

KVP is not a bearer certificate, and is not easily transferable. Permission

of the post master is required for any transfer. These cannot be traded in
the secondary market.

KVP cannot be traded in the secondary market and, hence, the question of
its market value does not arise.

25

KVP is held physically in the form of certificates that are issued to the
investors by the post office. The option of holding KVP in demat form is
not available.

Although no TDS is applicable on the interest income from KVP, there are
no tax incentives as per the provisions of the Income Tax Act, 1961.

Maturity on providing proper identity and by simple discharge of

the certificate on the reverse.

Returns:
KVP Scheme doubles money in seven years and three months.

What is the liquidity of KVP?

If the premature encashment takes place within a period of one year from the date
of purchase of the certificate, only the face value of the certificate shall be
payable. No interest is payable in this case.
After the expiry of one year, but before two years and six months from the date of
the issue of the certificate, the face value of the certificate together with simple
interest at the specified rate for the completed months for which the certificate has
been held, shall be payable.
If a certificate is encashed any time after expiry of two-and-a-half years, the
amount payable is as specified by the government from time to time.

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 longterm 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.
26

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 tax-exempt.

Interest and Returns

NSC attracts interest rate of 8% per annum compounded half-yearly. Because of
compounding, the effective rate of interest comes to 8.16%. NSCs are under a
cumulative scheme and the entire interest earned every year is reinvested. It is
paid along with the principal amount only after the maturity of the certificate. For
example, if a person invests Rs. 10,000 in NSC today, he will receive Rs. 16,010
after 6 years.

Features of National Savings Certificate

Pre-mature encashment is not permissible.

Reinvestment of the annual interest earned.

Post office savings account interest benefit for 2 years, if amount is not
drawn at maturity.

Reinvestment of amount after maturity is allowed.

Loan can be availed against the security of the certificate.

Nomination facility available.

Transferable from one Post office to another.

Transferable from one person to another.

Duplicate Certificate issued in case the certificate is lost, stolen, mutilated

or defaced.

Types of NSCs and Eligibility

27

Any adult individual can buy NSC for himself or on behalf of a minor. Two adults
can jointly buy the certificate. Even a trust can buy NSCs. There are basically 3
types of certificates that can be bought by individuals:
Single Holder Type Certificate: This certificate can be bought by an individual in
his name or on behalf of minor, or a trust.
Joint 'A' Type Certificate: this certificate is issued to 2 adults jointly and is
payable to both holders jointly or to the survivor.
Joint 'B' Type Certificate: This certificate is issued to 2 adults jointly payable and
is payable to either of the holders or to the survivor.

How and Where to Apply

NSCs can be purchased at authorized post offices and all head post offices across
the country. A person can apply for an NSC in a prescribed manner at any of
the post offices. NSC can be applied for in person or through an agent. Agents for
this purpose are active in every nook and corner of the country. NSCs are
available in denominations of Rs. 100, Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000.
Minimum purchase is for Rs. 100 and there is no maximum limit to the purchase
of NSCs. A person can invest as much as his budget allows. Payment for NSCs
can be made in cash or by a locally executed cheque or order or through a demand
draft in favor of postmaster. A duly signed withdrawal form along with passbook
to enable withdrawal from savings account of post office could also be used as a
payment mode. Also payment can be made by surrendering a matured old
certificate discharged as; Received payment through issue of fresh certificate
vides application attached.

Encashment
The NSC can be encashed at any registered or authorized post office. The
authority needs to be satisfied with the identity of the person presenting the
certificate. On receipt of the amount, the receiver signs the back of the certificate
as a proof of receipt. The NSCs can also be encashed through banks or by
transferring them to the desired post office.
If the certificate is purchased on behalf of a minor, and at the time of maturity the
minor has attained the age of adult, then that recent adult needs to sign the
28

certificate. The signature needs to be attested by the person who bought the
certificate in his behalf or by the postmaster.
The maturity period of NSC is 6 years. Generally pre-mature encashment is not
allowed but in cases like death of the holder, forfeiture by the nominee or courts
order, the NSC can be encashed prematurely.

Tax benefits
Deposits in NSCs up to Rs. 1 lakh can be availed as deduction under Section 80C
of the Income Tax Act. The annual interest earned is deemed to be reinvested and
thus qualifies for the deduction under Section 80C.

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 through out the country.

Features:

The minimum investment is 1000Rs and in multiples of Rs.1000 subject to

a maximum of Rs.15 lakh.

Citizens of 60 years of age and above are eligible to invest. Single or joint
account (with spouse only) can be opened. Citizens who have retired
under a voluntary or a special voluntary retirement scheme and have
attained the age of 55 years are also eligible, subject to specified
conditions.

The deposit will carry an interest of 9% per annum (taxable). The maturity
period of the deposit will be five years, extendable by another three years.

Premature withdrawal after a period of one year will be allowed, subject to

some deductions.

The investments in the scheme will be non-tradable and non-transferable.

However, nomination facility will be available.
29

Non-Resident Indians and Hindu Undivided Families are not eligible to

invest in the scheme.

Returns:
The deposit will carry an interest of 9% per annum (taxable).

Advantages:
This Scheme is most beneficial to Senior citizens and provides a high rate of
interest as compared to bank interest of 4.5- 4.75%. Although the interest on the
deposit is taxable, the deposits themselves are tax free. As the post office is a
department of the government of India, it is a safe investment. The principal
amount is assured.

How to Start Post office Senior Citizens account:

A Senior Citizen Account can be opened through any designated post
office through out the country. The account can be opened by any individual 60
years of age and above either individually or jointly (with spouse only).

FINDINGS

Total No. of post office on DATED 13.03.2013

Sl.
N
o

Name
Circle

of

Postal

Name of State

Total No.
of Post
offices

No. of Post
offices offer
POSB facili

ANDHRA PRADESH

ANDHRA PRADESH

15973

15973

ASSAM

ASSAM

4013

4013

BIHAR

BIHAR

8935

8933

CHATTISGARH

CHATTISGARH

3144

3143

DELHI

DELHI

545

542

30

GUJARAT

GUJARAT

8979

8976

HARYANA

HARYANA

2261

2261

HIMACHAL PRADESH

HIMACHAL PRADESH

2778

2778

JAMMU & KASHMIR

JAMMU & KASHMIR

1691

1691

10

JHARKHAND

JHARKHAND

3096

3096

11

KARNATAKA

KARNATAKA

9679

9679

12

KERALA

KERALA

5067

5066

13

MADHYA PRADESH

MADHYA PRADESH

8314

8314

14

MAHARASHTRA

MAHARASHTRA

12566

12552

GOA

258

258

TRIPURA

708

708

NAGALAND

328

328

MIZORAM

389

389

ARUNACHAL PRADESH

299

299

MEGHALAYA

490

490

MANIPUR

698

698

15

NORTH EAST

16

ORISSA

ORISSA

8163

8163

17

PUNJAB

PUNJAB

4017

4017

18

RAJASTHAN

RAJASTHAN

10324

10323

19

TAMIL NADU

TAMIL NADU

10996

10996

20

UTTAR PRADESH

UTTAR PRADESH

17726

17726

21

UTTARAKHAND

UTTARAKHAND

2719

2708

22

WEST BENGAL

WEST BENGAL

8853

8853

31

SIKKIM
TOTAL

209

209

153218

153182

India has been divided into 22 postal circles, each circle headed by a
chief postmaster general. Each circle is divided into regions, headed
by a postmaster general and comprising field units known as divisions
(headed by SSPOs and SPOs). These divisions are further divided into
subdivisions, headed by ASPs and IPSs. Other functional units (such
as circle stamp depots, postal store depots and mail motor service)
may exist in the circles and regions. In addition to the 22 circles, there
is a base circle to provide postal services to the Armed Forces of
India. The base circle is headed by a Director General, Army Postal
Service (with a rank of major general).
The highest post office in the world is in Hikkim, Himachal Pradesh,
India at a height of 15,500 ft (4,700 m) (postal code 172114).

Gross Collections under Various Saving Schemes

(Rs.crore)

Schemes

2009-10

2010-11

2011-12

Post Office
Savings Account
Post Office
Recurring
Deposits
Post Office
Monthly Income
Scheme
Post Office Time
Deposits (1 Year)
Post Office Time
Deposits (2 Year)
Post Office Time
Deposits (3 Year)
Post Office Time

7,963

10,343

10,597

4,580

5,532

6,778

2,318

4,775

7,867

505

738

872

96

137

173

52

94

54

519

664

848

32

Deposits (5 Year)
National Savings
Scheme 1992
National Savings
Certificate VIII
Issue
Kisan Vikas Patra
Public Provident
Fund
Deposit Scheme
for Retiring
Employees
Relief Bonds
(5-year)

101

85

73

5,124

5,103

5,732

9,650
4,634

15,712
5,617

17,543
7,221

138

78

108

1,071

6,214

1. Post-Office Saving Account:

The post-office savings account can be opened minimum of Rs. 50 and maximum
of Rs. 1, 00,000 by an individual. However, for joint account the upper limit is Rs.
2, 00,000/-, but there is no limit for group, institutional or official capacity
account.
Withdrawal from the account is by cheques and there is no restriction on
withdrawals, unlike in a commercial bank. Accounts having minimum balance of
Rs. 200 during April- September and October-March qualify for six monthly prize
draws in the next January and July.
The interest is tax free and is 1/2 per cent more than that offered on savings bank
account by commercial banks.

2. Post Office Recurring Deposit:

The scheme covers free life insurance cover after receiving contributions for 24
months on account of denomination of Rs. 5, Rs. 10, Rs. 15 or Rs. 20.
In the event of death of the depositor after a minimum period of two years, from
the date of opening the account, the heir or nominee will get the full maturity
value of the account provided the depositors age was between 8 and 53 years and
33

there have been no withdrawals or defaults during the first two years and the
account remains current at the time of death.
The benefit of cover is not available for an extended period of deposit beyond five
years.

Monthly Investment

Total Investment
(60 Months)

Money returned on
Maturity (after
60 months)

10
50
100
1000
1500
3000
5000

600
3000
6000
60000
90000
180000
300000

746.51
3,733
7,465
74,651
1,11,977
2,23,953
3,73,255

The post-office recurring deposits offers a rate of interest, currently at

8.4 per cent per annum compounded quarterly.

3. Post Office Time Deposit:

A Time Deposit is an investment option that pays annual interest rates

compounded quarterly, and is available through post-offices across the country.
They are suitable for capital appreciation in the sense that money grows at a predetermined rate.

34

Unlike certain other investment options, where returns are commensurate with the
risks, the rate of growth is also high; Time Deposits return a lower, but safer,
growth in investment.
Therefore, Time Deposits are one of the better ways to get a relatively high
interest rate for savings. The only condition is that they are bound for some
specific period of time. The investors can borrow against a Time Deposit. The
balance in account can be pledged as a security for a loan.

Example:If a depositor of 5-year TD account opened on 1.6.1983 desire to close the

account or withdraw a particular deposit after one year or two years or three years
or four years, he will be entitled to the interest at the following rates on basis of
rates given in Table F of Rule 7 of POTD Rules, 1981.
After one year = 9 2 = 7%
After two years = 9 - 2 = 7 %
After three years = 10 -2 = 8 %
After four years = 10 1/2 2 = 8 %
Since there is no separate Time Deposit account for four years, the rate of interest
admissible for 3-year TD account will apply in case a 5-year TD account is closed
after four years.

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 lumpsum amount initially and earn interest on a monthly basis for their livelihood. The
scheme is, therefore, a boon for retired persons.

For example:
Ajay invests Rs 4.5 lacs in the post office monthly income scheme. His
interest per year is Rs 36,000 @8%; hence he gets Rs 3,000 per month as

35

income. If you do not withdraw the amount for some month, it would not
earn any interest and just lie in the account.

This post office saving scheme does not come under sec 80C so there is no
tax-exemption for the amount you invest in this, and interest income is
taxable, but there is no TDS cut in this scheme. Read 7 tax saving tips you
can deposit the money in the POMIS with cash, demand draft or local
cheque. Once you open a monthly income scheme account, you will be
issued a scheme certificate and a passbook to record the transactions against
the post office MIS scheme. The maturity period of this scheme is 6 years.
You will also be eligible for a 5% bonus if you retain your scheme for 6
years, so eventually your overall return including this bonus can turn out to
be around 8.9%. There is a limit on the amount you can invest in POMIS.
Its limited to Rs 4.5 lacs for a single account and 9 lacs for a joint account.
You can have any number of accounts, but within the overall upper limit.
There is no compulsion to take your money out after maturity, you can
leave the money in the account, but then it would earn the interest equal to
saving bank account for next 2 years only.

36

37

5. National Savings Scheme:

In addition to the above post-office deposit scheme, various National Savings

Schemes have been introduced from time to time to mobilize public savings for
financing the economic development plans.
These schemes have been very popular in view of tax benefits enjoyed by them.
Unlike commercial bank schemes, these schemes are uniform all over the country.
Again, the interest is paid on completed years no payment being admissible for
broken periods of a year. Premature encashment is discouraged. Some of the
schemes are offered through the State Bank of India /nationalized banks. The
national savings certificates sold through S.B.I are designated as Bank Series.
Unlike commercial banks schemes, nomination facility is available for all the
National Savings Schemes. Accounts can also be transferred from one Post Office
to another. Further, many of these savings certificates can be pledged as security,
towards loan guarantee.

6. Kisan Vikas Patras:

Such instruments are available at post offices and can be obtained in

denominations of Rs. 1000, 5000 and Rs. 10,000. The maturity period here is 5/12
years but premature: encashment is possible. The interest payable on Kisan Vikas
Patras is compounded annually \ but is taxable.

7. Indira Vikas Patras:

These instruments are available at post offices and can be purchased by any
person. Minimum investment in Indira Vikas Patras is Rs. 100 and there is no
maximum limit.
These are available in the maturity denominations of Rs. 200, 500, 1000 and Rs.
5000 an the investor has to pay half the face value. The initial amount is doubled
in 5 years and these: patras cannot be encased premature.

38

The interest on Indira Vikas Patras is compounded annually, is payable on

maturity only and is taxable. These instruments are like bearer-bonds and hence
have to be carefully preserved.

8. 15 Years Public Provident Fund Account:

Under this scheme, deposits can be made in lump sum or in 12 installments,

minimum of Rs. 500/- and maximum of Rs. 70,000 in a financial year. These
deposits qualify for income tax rebate under Sec. 88-of I.T. Act. Withdrawal is
permissible every year from 7th financial year; loan facility is available from 3rd
financial year.

9. Deposit Scheme for Retiring Govt. Employees 1988:

This scheme permits only one account which can be opened by retired
central/state Govt. employee in its own name or jointly with the response. The
account can be opened within three months from the date of receiving the
39

retirements benefits with a minimum of Rs. 1000/- and in multiple thereof can be
withdrawn after the expiry of 3 years from the date of deposit.
Only one withdrawal in multiples of Rs. 1000/- can be made in a calendar year.
Premature encashment can be made after one year from the date of deposit but
before the expiry of 3 years in which case the interest on the amount so
withdrawn will be payable from the date of deposit up to the date of withdrawal.
The excess interest paid will be adjusted at the time of such withdrawal.

10. Deposit Scheme for Retiring Employees of Public Sector

Companies, 1991:
To provide the benefits to the retiring employees of public sector companies, the
deposit scheme for retiring govt. employees-1989 was introduced in 1991 for the
public sector companies retiring employees.

There are different kinds of Small Savings Schemes suitable for

various segments of the population.
The Government of India have reduced the rate of interest for many of the Small
Savings Schemes w.e.f. 01.04.2013 as follows:

S.
No.

Scheme

Rate of Interest
w.e.f. 01.04.2012

1.

Rate of Interest
w.e.f. 01.04.2013
4.0%

Savings Deposit

4.0 %

1year Time Deposit

8.2 %

2.

8.2%

3.

8.2%
2year Time Deposit

8.3 %

3year Time Deposit

8.4 %

4.

8.3%

40

5.

8.4%
5year Time Deposit

8.5 %

6.

8.3%
5year Recurring Deposit

8.4 %

7.

9.2%
5year SCSS

9.3 %

5year MIS

8.5 %

5year NSC

8.6 %

8.

8.4%

9.

8.5%

10.

8.8%
10year NSC

8.9 %

11.

8.7%
PPF

8.8 %

* - NSS -92 Scheme was withdrawn by the G.O.I. w.e.f 01.11.2002

12. NSCIX ISSUE(10yrs)
The SCSS introduced w.e.f. 1-7-2004

MONTHLY SAVINGS
OPTION:
PORD
REGULAR INCOME
SCHEMES:
POMIS, SCSS

TAX BENEFIT SCHEMES:

NSC/ PPF

OTHER SCHEMES:
POTD /POSA
Some Special Advantages of Small Savings Schemes
41

Most of the Schemes have facilities for nomination and in case of death of
depositor his / her nominee (s) can easily withdraw the deposits with interest.
Certificate / Pass Book can be transferred to any other Post Office
Deposits can be made through Government appointed authorized male / female
agent, who accept money / cheque / drafts against proper receipt.

Pay Roll Savings Scheme

Under this scheme, any monthly salaried person can voluntarily authorize his
appointing authority or employer to deduct monthly contributions from his salary
and to remit into anyone of the savings schemes like Post Office Recurring
Deposit, Post Office Time Deposit, National Savings Certificate (VIII issue) and
Public Provident Fund Scheme. The group leader appointed in each organization
for collection purpose is paid by the PO which can be deducted at commission for
his service who implements the scheme in the respective concern.

Small saving instruments form the backbone of the savings mobilized by the
Government of India. They represent the safest instruments and therefore most
popular among all instruments. The advantages of small saving schemes are that
they are government sponsored, have assured returns, are easy to understand for
small investors, have tax benefits and have some liquidity.
Some of these schemes are Kisan Vikas Patra, Post Office Monthly Income
Scheme,15 Years Public Provident Fund Scheme, Post Office Time Deposit
Scheme, 5-Years Post Office Recurring Deposit Scheme, Post Office saving
Scheme, National Saving Certificate(VIII Issue), Senior Citizen scheme, National
Savings Scheme etc.
The Kisan Vikas Patra is an entirely safe instrument simple and easy to
understand and invest. The minimum investment limit is Rs.500/- and no
maximum limit. The rate of interest 8.40% compounded annually, otherwise the
yearly rate of interest is 8.25%
The post-office monthly income scheme(MIS) provides for monthly payment of
interest income to investores.It is meant for investors who want to invest a sum
amount initially and earn interest on a monthly basis for their livelihood.

42

The Public Provident Fund Scheme is a statutory scheme of the Central

Government of India.The minimum deposit is Rs.500/- and maximum is
Rs.70,000/- in a financial year.One deposit with a minimum amount of Rs.500/is mandatory in eachg financial year.
A Post-Office Time Deposit Account(RDA) is a banking service similar to a Bank
Fixed Deposit offered by by Department of post,Government of India at all post
office counters in the country.
National Savings Certificate (VIII Issue) have minimum invetment limit as
Rs.500/- and no maximum limit. The certificate can be pledged as security against
a loan to banks/Government Institutions. The Certificates are encashable at any
Post Office in India before maturity by way of transfer to desired post office.
A new savings scheme called Senior Citizens Savings Scheme has been notified
with effect from Agust 2,2004. The Scheme is for benefit of senior citizens and
maturity period of the deposit will be five years, extendable by another three
years. The minimum investment is Rs.1000/- and in multiples of Rs.1000 subject
to a maximum of Rs.15 lakh.

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Post Office Savings Bank

Savings
Scheme

No. of
Accounts

Balance in Rs.

Monthly Income
Scheme (MIS)

74,372,853

1,795,033,300,000

32%

Kisan Vikas Patra

(KVP)

70,67,530

1,663,301,400,000

30%

Recurring Deposit
(RD)

24,737,525

650,733,400,000

12%

National Savings
Certificate VIII
(NSC)

20,679,376

553,091,700,000

10%

Time Deposit
(TD)

7,809,780

262,639,800,000

4.3%

Public Provident
Fund (PPF)

7,809,780

234,010,400,000

4.3%

7,046,881

226,894,900,000

4.0%

5,014,296

206,508,700,000

3.4%

Savings Account
Senior Citizens
Savings Scheme
(SCSS)

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BIBLIOGRAPHY

BOOKS
1) POST OFFICE SERVICE BOOK VOLUME-III
2) Rural Marketing
3) Security Analysis & Portfolio Mgmt

MAGAZINES
1) DALAL STREET
2) BUSINESS STANDARD
3) BUSINESS TODAY

THROUGH INTERNET
1) www.indiapost.gov.in/posb.aspx
2) www.thehindubusinessline.com/...post-office-savings-scheme
3) www.aarthashastra.com

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