Investor Education
Post Office FD Scheme
Post Office Fixed Deposit Investment Scheme
Fixed Deposit is one of the safest investment alternatives offered by Post Offices, Banks, and NBFCs. Post Office Fixed Deposit, often called Post Office Time Deposits are investment alternatives offered by the Postal Services in India. As an ideal option for those looking for a safe investment alternative, these Post Office FDs are backed by the sovereign guarantee of the Indian Government.
Let’s have a closer look at the offerings of the post office fixed deposit scheme.
Who Can Open Post Office FD Account ?
- An Individual
- Joint Account (up to three adults)
- Minor or person of unsound mind in supervision of a guardian
- Minor above the age of 10 years or more in his own name
Features
| Particulars | Details |
| Tenure | 1,2,3 and 5 yrs |
| Minimum Deposit Accepted | Rs. 1,000 & in multiples of Rs. 100 thereafter. |
| Interest Rates | 5.50% to 6.70% |
| Interest Payment | Annually (Calculated Quarterly) |
| Mode of Payment | Cash/Cheque |
| Premature Withdrawal | Allowed after 6 months |
| Nomination | Available |
Post Office Term Deposit do not offer any additional returns to senior citizens. Thus, the returns on a particular amount are the same regardless of whether the investor is over or under the age of 60 years.
Benefits of Post Office Scheme
Decent returns:
Post Office FD account offers better returns when compared to other alternatives available in the market.
Certain returns:
As Post Office Deposits are backed by the government, the FDs with post office provides high safety of capital to the depositors along with the guaranteed interest.
Other Facilities:
Investors can benefit from tax deductions under Section 80C of the IT Act,1961 for fixed deposit with a tenure of 5 years. Adding to it, they can avail loans against the FD value and withdraw the invested amount prematurely.
Document Required
Proof of Address
- Electricity bill
- Telephone bill
- Bank statement
- Post Office issued certificate or ID
- Passport
Proof of Identity
- PAN
- Voter ID card
- Aadhaar card
- Driving license
- Photo ration card
- Passport
The depositor must provide details of a nominee for the time deposit. Also, the presence of a witness is a must when the depositor signs the investment papers as well.
Must Check - Current Post Office Fixed Deposit Interest Rates
Premature Withdrawal
- Before six months from the opening date, any type of withdrawal is not permitted.
- The PO savings account interest will be applicable if the FD account is terminated after 6 months but before one year.
If 2/3/5 years account is prematurely closed after 1 year, interest shall be calculated 2% less than of TD interest rate (i.e. 1/2/3 years) for the completed years, and for a part period less than a year, Post Office savings account interest rates will be applicable.
Extension of Post Office FD Scheme
The account can be extended from the date of maturity within the following prescribed period.
- 1 year TD = within 6 months of maturity.
- 2 year TD = within 1 yr of maturity.
- 3/5 year TD = within 1.5 yrs of maturity.
The request for an extension of the FD account can be submitted along with the opening application. The interest rate applicable on the day of maturity to the respective FD account should be fixed for an extended period.
Pledging of the Account
The fixed deposit opened with the post office can be pledged as collateral security. To do this, an individual needs to fill and comply with the form at the respective branch accompanied with an acceptance letter from the pledgee.
Pledging can be made to the following authorities.
- The President of India/Governor of the State.
- RBI/Scheduled Bank/Co-operative Bank/Co-operative Society
- Corporation (public/private)/Local Authority/Govt. Company.
- Housing finance company.
Who Should Invest ?
Post Office term deposit scheme is ideal for those who belong to the middle-income class. They should direct their savings towards this scheme since Tax Deducted at Source i.e. TDS is not applicable to the investments made in these Term Deposits.
If an individual has children above the age of 10 yrs, he can encourage them towards investing in this scheme too. Since the scheme is brought by India Post, which is wholly backed by the Government of India, the safety of one’s money is the primary objective.
FAQs - Post Office FD SchemesQ. What are the tenures available to open Post Office FD ?
A. The tenure options available are 1,2,3 and 5 years.
Q. What is the interest rate range for Post Office FD ?
A. The interest rate for Post Office FD is in the range of 5.50% to 6.70% per annum for different tenures.
Q. Is premature withdrawal allowed ?
A. Yes, premature withdrawals are allowed but only after the completion of 6 months from the date of deposit.
Q. Is the Nomination facility available ?
A. Yes, individuals can avail of this facility at the time of account opening or during the tenure of the deposit.
Q. Can you avail loan against Post Office FD ?
A. Yes, the FD can be pledged as collateral security for getting loans with the authorized entities.
More Information:
Post Office Saving Schemes
Post Office Recurring Deposit
Post Office Time Deposit Scheme
How to Open Post Office Savings Account
Sukanya Samriddhi Yojana (SSY) Scheme
National Pension Scheme