Post Office Time Deposit Scheme – Interest Rate, Eligibility, Benefits

Post Office Time Deposit Scheme: The Post Office Time Deposit Account (POTD) is among the most renowned investment schemes provided by India Post. While open to all, it garners significant popularity in remote and rural areas, where access to investment options is scarce and underbanking prevails. Dive into the following article for an in-depth understanding of the POTD Scheme.

Post Office Time Deposit Scheme
Post Office Time Deposit Scheme

Post Office Time Deposit Scheme 2024

The Indian government offers the Post Office Time Deposit, also known as the National Savings Time Deposit plan, as a saving avenue. It presents an enticing interest rate compared to traditional savings bank accounts. Investors can engage in this scheme through any post office across India. Given the higher returns and enhanced flexibility, opting for national savings time deposit accounts proves to be an excellent choice for savers.

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POTD Scheme Details in Highlights

Name of the schemePost Office Time Deposit Scheme
Also known asNational Savings Time Deposit Account
Launched byIndia Post
Objectiveto encourage the nation’s residents to save money and make sure they receive risk-free returns on their investments

Post Office Time Deposit Scheme Interest Rates

Account TenureApplicable Interest Rate
1 Year6.9%
2 Years7%
3 Years7.1%
5 Years7.5%

Should individuals prefer not to receive yearly interest, they can choose to transfer it to their post office savings account, where it accrues an annual interest rate of 4%. Notably, this option is not available for the Post Office Time Deposit (POTD) with a one-year tenure.

Alternatively, rather than receiving the interest in 12 monthly installments, individuals have the option to transfer it to a 5-year recurring deposit account at the same bank or post office. In this case, individuals must submit a new application to the office or bank before the interest payment date.

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Features of Post Office Time Deposit Scheme

Some of the key features of the scheme are mentioned below:

  • Post office time deposit programs offer flexibility with deposit durations ranging from one to five years, allowing only one deposit per account.
  • These programs assure account holders of guaranteed returns on their investments.
  • Transferring time deposit accounts between post offices is a straightforward process.
  • Time deposit accounts can be held either jointly or independently.
  • Account holders have the option to extend the term of their time deposit accounts upon maturity.
  • Upon maturity, funds from matured accounts are automatically renewed for the initial deposit duration at prevailing interest rates, unless withdrawn.
  • There is no limit to the number of time deposit accounts one can open under the scheme.
  • The scheme mandates a minimum deposit of Rs. 1,000, with amounts required to be in multiples of Rs. 100 to avoid interest-free reimbursements.
  • Investors can now open POTD accounts at all public sector banks and select private banks such as ICICI Bank, Axis Bank, and HDFC Bank, as permitted by the central government.
  • POTD investments present an attractive alternative for investors seeking to diversify their portfolios and replace traditional bank fixed deposits.

Benefits of Post Office Time Deposit Scheme

The benefits of the scheme are mentioned below:

  • Post Office Time Deposit Account (POTD) investments have no maximum limit, offering investors flexibility in their deposit amounts.
  • The POTD Scheme ensures a guaranteed profit on invested funds, providing a secure investment avenue.
  • Section 80C of the Income Tax Act allows for tax deductions on five-year time deposits, providing tax benefits to investors.
  • Children as young as ten years old can independently operate POTD accounts, facilitating financial literacy from a young age.
  • The POTD Scheme includes a nomination facility, allowing account holders to designate beneficiaries for their investments.
  • With a minimum investment requirement of Rs. 1,000 and no maximum restriction, POTD investments offer flexibility to investors of all financial backgrounds.
  • Transferring POTD accounts across post offices is a straightforward process, and early withdrawals of deposits are permitted under certain conditions.
  • POTD investments are considered safer than Fixed Deposits (FDs) as both the principal amount and generated interest are guaranteed by the sovereign, providing investors with peace of mind.

Documents Required

Following are the documents required for Post Office Time Deposit Scheme

  • SB3
  • SB13 (pay-in slip)
  • Specimen Signature Slip

Eligibility Criteria for POTD Scheme

Before applying for the Post Office Time Deposit Scheme, ensure that you meet all the eligibility criteria outlined below:

  • Any resident Indian, whether individually or jointly, is eligible to open and manage a Post Office Time Deposit (POTD) account.
  • A minor aged ten years or older is eligible to independently open and manage a POTD account.
  • For minors younger than ten years, a parent or guardian can open and manage a POTD account on their behalf.
  • Non-resident Indians (NRIs) are not eligible to open a Post Office Time Deposit account.

The Time Deposit Scheme is not available to the following funds or groups:

  • Institutional account holders
  • Trust funds
  • Regimental funds
  • Welfare funds

Application Process of Post Office Time Deposit Scheme 2024

To initiate the process of opening a Post Office Time Deposit Account online, individuals must first hold an existing Post Office Savings Account and be enrolled in the Indian Post Office online banking services. Once these prerequisites are met, the following steps can be followed:

  • Access the Indian Post eBanking website and input your captcha code along with your registered “User ID” to proceed to the login page.
  • Upon successful login, navigate to the “Service Request” section located under the General Services menu.
  • Within the “Service Request” section, locate and select the option to initiate the opening request for a Post Office Time Deposit.
  • Follow the on-screen instructions provided to commence the process of opening a Post Office Time Deposit Account.

The procedures listed below can be used to open a POTD account offline:

  • Obtain the POTD application form either online or by visiting a nearby post office.
  • Upon completing the form, bring it along with the necessary documents and a minimum of Rs. 1,000 to the post office to initiate your POTD account.

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