How to invest in Post Office Monthly Income Scheme

Monthly Income Scheme is offered by the post office. It allows investors to receive monthly income in the form of interest during the term of the account. Interest rate is decided periodically by the government and it is a low-risk plan. We discuss the account opening considerations and process hereunder.

Eligibility
An adult —alone or jointly, a guardian (on behalf of a minor) or a minor above 10 years of age can open an MIS account in their names. MIS account is not available to non-individuals.


Amount
The MIS account can be opened with as little as Rs 1,000 and in multiples of Rs 100 thereafter. One can deposit up to Rs 4.5 lakh in a single account and up to Rs 9 lakh in a joint account. Interest is payable on the completion of one month from the date of opening of the account until maturity of the account.

Account opening
The MIS account needs to be opened by visiting the Post Office and filling up a common account opening form. Photographs of applicants with KYC documents for identity, address proof need to be provided. Initial contribution cheque also needs to be given with the application.

Also read: Post office schemes interest rate: Know PPF, NSC and other post office deposit schemes rates

Account closure
The MIS account is valid for five years from the date of opening. One cannot close the account before the end of a year from date of opening. If the account is closed after a year but before 3 years, 2% will be deducted from the principal before repayment. After 3 years but before 5 years from date of opening, 1% will be deducted from the principal before repayment.

Points to note

• The overall cap of Rs 4.5 lakh cannot be exceeded across all MIS accounts of an individual. However, this does not include account opened on behalf of minor.
• All joint holders have equal share in the investment.
• No additional interest is payable if the account holder fails to claim the monthly interest.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)