This post office system offers a better and higher interest rate than many major bank FDs

1. FPP interest rate

The current interest rate available under this savings plan is 7.1% per annum (compounded annually). It should be noted that the interest rate in this program is higher and better than that of many term deposits of leading banks. The minimum investment to be made is Rs 500 and it can reach a maximum of Rs 1,50,000 per financial year. Users can make deposits in a lump sum or in installments. Users can open the account in cash/cheque and in case of check, the date the check is made on the government account must be the date the account is opened/subsequently deposited into the account.

During this time, the interest rate will apply as notified by the betrothed department on a quarterly basis. Interest will be calculated for the calendar month on the lowest account balance between the close of the fifth day and the end of the month. Interest will be credited to the account at the end of each financial year.

tax free: Interest earned in this savings plan remains tax-exempt or tax-free under the Income Tax Act.

2. Maturity

2. Maturity

The maturity period for the PPF scheme is 15 years, excluding the year in which the account was opened. After expiration, investors get three options. He can accept payment when due by filing an account closure form with the relevant post office passbook. He can keep the value at maturity in his non-deposit account and the PPF interest rate will apply and payment can be made at any time or he can withdraw by exercise. He can extend his account for a further block of 5 years (within one year from maturity) by filing the prescribed extension form.

3. Premature withdrawals

3. Premature withdrawals

Investors can opt for premature withdrawals as they are permitted, but only after 5 years of consistent investment under certain conditions. In the event of the fatal illness of the account holder, spouse or dependent children, in the event of higher education of the account holder or dependent children, and in the event of a change in the residence status of the account holder. It is important to note that at the time of early closing, 1% interest will be deducted from the account opening date/extension date, as applicable.

4. Loan Facility

4. Loan Facility

The loan may be contracted before the expiry of a period of five years from the end of the year during which the initial subscription was made. Only one loan can be taken out per fiscal year.

Who can open?

Who can open?

(i) a single adult by a Resident Indian.

(ii) a guardian on behalf of a minor/insane person.​

A single account can be opened throughout the country, either at the post office or at any bank.

Stephen V. Lee