Post Office Monthly Scheme (POMIS) is a high return scheme offered by India Post. Backed by the sovereign guarantee, POMIS is a low-risk investment providing a steady revenue stream. It has a fixed lock-in period of five years and one can either withdraw the amount or reinvest it upon maturity. Unlike other instruments such as FD, POMIS entitles the investors to earn income in the form of monthly payable interest.
For instance, Sarita invested ₹1,00,000 in POMIS, she will receive interest income on her sum monthly, at the interest rate of that particular quarter say 6.6 percent (for September 2021). This means that Sarita will receive ₹550 as interest income on her initial investment at the end of each month. After the sum matures on the completion of five years, she can withdraw her sum of ₹1,00,000 or reinvest it.
Safe and affordable: Since POMIS is backed by the Ministry of Finance, it is a safe investment that offers guaranteed returns. One can start with a minimum amount of ₹1,500 up to Rs. 4.5 lakh for a lock-in period of five years. In case the individual wishes to withdraw the whole amount before five years, a small penalty of 1-2% is levied.
Payout and reinvestment: The transaction of monthly interest income is hassle-free and one has the option to either collect cash from the post office or get it transferred to his/her bank account. After maturity one can choose to invest the amount in the same scheme for another five years and continue to reap the benefits. In the event of the death of the beneficiary, the claim of benefits is passed to the nominee.
Steady revenue stream: POMIS offers a steady revenue stream which, although not immune to inflation, is less risky and suitable to investors with a low-risk appetite.
Transferable: If the investor decides to migrate to any other part of India, he/she can also transfer his/her POMIS scheme to the nearest post office easily.
Joint/Minor account facility: POMIS offers a joint account facility and a parent can also open an account on behalf of his/her minor. In a joint account, the maximum amount limit is ₹9 lakh and for a minor account, the limit is ₹3 lakh.
How to invest in POMIS?
Any adult Indian citizen (except NRIs) can open a POMIS account. The process is simple and a post office savings account holder can start by submitting a POMIS application form. If an individual does not have a post office savings account, he/she is required to open that before he/she can open a POMIS account.
Along with the application form, one is required to submit a copy of a few documents for verification. Signatures of witness and/or nominee on the application form are also essential on the form. After making the initial deposit and the completion of the process, the account holder can expect to receive his/her first return after the completion of one month from making the payment.
Post office monthly income scheme is a flexible investment option with government backing. It offers a sustainable revenue source and is an option worth considering for people looking to invest in a low-risk alternative.