A look at various financial products offered by the Post Office

The telegram may be dead and postage stamps on their way out, but the post office is not sliding into oblivion. Its small savings schemes are a favourite with investors, and if India Post bags the banking licence, it could be a financial powerhouse with its 1.55 lakh branches. Here are some of the products and services offered by the post office.

SAVINGS ACCOUNT

Tenure: NA

Interest rate: 4%

It has a very low minimum balance requirement of Rs 50 without cheque facility, and Rs 500 with cheques.

RECURRING DEPOSIT

Tenure: 5 years

Interest rate: 8.3%

* Investor is given a flexible window of up to 15 days to deposit the sum.

* It is not necessary to open a savings account as well.

* The term can be extended by up to five years on maturity.

TIME DEPOSITS

Tenure: 1 - 5 years

Interest rate: 8.2 - 8.4%

The five-year deposits are eligible for tax deduction under Section 80C.

Minors above 10 years can open and operate account.

Deposits can be foreclosed after one year. The one-year deposit can be foreclosed after six months.

MONTHLY INCOME SCHEME

Tenure: 5 years

Interest rate: 8.4%

* Minimum deposit Rs 1,500 and maximum of Rs 4.5 lakh.

* Interest flows into savings account at the same post office.

* It can be foreclosed after one year with a 2% deduction.

* After three years, the deduction is 1%.

SENIOR CITIZENS' SAVING SCHEME

Tenure: 5 years

Interest rate: 9.2%

* It is open to investors above 60 years. The retired or those who have taken VRS can join at 55.

* There is a maximum limit of Rs 15 lakh per individual.

* Investments are eligible for deduction under Section 80C.

* Can be foreclosed after one year with 1.5% deduction. After two years, the deduction is 1%.

* The interest is paid out quarterly.

* Can be extended for 3 years on maturity.



PUBLIC PROVIDENT FUND

Tenure: 15 years

Interest rate: 8.7%

* There is a minimum deposit of Rs 500 and maximum of Rs 1 lakh in a year.

* Investments are eligible for deduction under Section 80C.

* The interest earned is tax-free.

* Account can be extended by five years on maturity.

* Withdrawals allowed after sixth year.

NSCs

Tenure: 5 - 10 years

Interest rate: 8.5 - 8.8%

* There is a minimum investment of Rs 100.

* Investments are eligible for deduction under Section 80C.

* Income accrued every year is treated as reinvestment and is eligible for tax benefits under Section 80C.

* There is no TDS, but income is fully taxable.

Other financial services offered by the post office

Money transfer

It offers wire transfers and international money orders, besides issuing traveller's cheques and 22 foreign currencies to foreign travellers. It also offers prepaid forex cards in seven currencies, demand drafts in 11 currencies and wire transfer in 13.

National Pension Scheme

Right now, the NPS facility is available at nearly 800 branches across the country. The NPS is a lowcost retirement plan. It is also portable and can be accessed from any part of the country.

Mutual funds

A qualified mutual fund adviser is available at designated branches of the post office. An investor can submit application forms, payment cheques and KYC documents at these branches. However, the facility has not taken off due to removal of entry load.

Life insurance

Postal Life Insurance is open only to employees of the Central and state governments, public undertakings and semi-government organisations. The Irda has allowed the post office to sell insurance policies of private companies.

Commercial banking

India Post is among the 36 companies that have applied for banking licences. The launch of commercial banking operations could pitchfork the post office to the forefront of financial services in India.

Source : http://economictimes.indiatimes.com/

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