Fixed Deposit Monthly Income Scheme
What is Monthly Income Scheme?
A Monthly Income Scheme (MIS) is a type of investment plan offers by the Government of India that guarantees returns to investors at an annual interest rate of 6.60%. You can receive these returns as a set monthly income.
Interest rates offered by various banks range from 2.75% p.a. to 3.75% p.a. for the general public, with senior citizens being offered additional interest of 0.50% p.a.
Fixed Deposit (FD) monthly income schemes are an ideal option for those who want to earn a regular fixed income on a monthly basis. There are many monthly income schemes offered by banks and this will help the investor earn a supplementary income.
This type of term deposit promises the investor guaranteed returns at a certain rate of interest, every month. This type of investment is a good option, especially for pensioners, who are looking to augment their income in some way.
Top Fixed Deposit Monthly Income Schemes
Following are some popular monthly income schemes that citizens of India can invest in
- Post office monthly income scheme - Many consider the Indian Post Office’s monthly income scheme to be a great investment. It is a risk-free investment for many, as it is backed by the government. Currently, the POMIS offers 7.40% annual interest that is due each month. The plan has a five-year deposit period. The maximum individual contribution is Rs.4,50,000, while the maximum joint investment is Rs.9,00,000. Starting your investment in this plan requires only Rs.1,500.
- Senior Citizen Saving Scheme – A senior citizen saving scheme is beneficial for the retired population of India. This scheme will give them a monthly income. This scheme allows many senior citizens to invest and the scheme is government-supported. Some post offices and bank branches offer this service. After retiring, you have one month to join this plan.
- Monthly Income Plan - A mutual fund called a Monthly Income Plan invests primarily in fixed income and just a little amount in equity and securities related to equities. The fund companies regularly distribute a steady income to its investors. The performance of the fund will decide this amount, which is not fixed. Because they are based on mutual fund performance, the returns are not guaranteed. Additionally, there is the chance of receiving poor returns.
Post Office Monthly Income Scheme Interest Rates
Given below are the revised interest rates offered on Post Office MIS schemes:
Tenure | Regular rate (per annum ) | Senior Citizen Rate (per annum ) |
5 years | 7.40% | NA |
Fixed Deposit Monthly Income Scheme Interest Rates
The interest rates for different bank's monthly income FD schemes are given below:
Bank | Tenure | Interest Rates (p.a.) |
7 days to 14 days | 2.75% | |
7 days to 14 days | 3.00% | |
7 days to 45 days | 3.05% | |
7 days to 10 days | 2.75% | |
7 days to 14 days | 3.00% | |
7 days to 14 days | 3.00% | |
7 days to 14 days | 3.25% |
*The interest rates can change as per banks rules and regulations.
Monthly Income Scheme Interest Rates for Senior Citizens
Bank | Tenure | Interest Rates (p.a.) |
HDFC Bank FD | 7 days to 14 days | 3.25% |
Axis Bank FD | 7 days to 14 days | 3.50% |
State Bank of India FD | 7 days to 45 days | 3.55% |
Kotak Bank FD | 7 days to 10 days | 3.25% |
IDFC Bank FD | 7 days to 14 days | 3.50% |
IDBI Bank FD | 7 days to 14 days | 3.50% |
Punjab National Bank FD | 7 days to 14 days | 3.75% |
*The interest rates can change as per banks rules and regulations.
Benefits and Features of Monthly Income FD Scheme
The various key benefits and features of monthly income FD schemes are mentioned below:
- This scheme is adaptable, with no upper limit on the amount of money that can be invested. It allows people to invest in the scheme according to their financial capabilities and needs.
- When compared to most other schemes, a monthly income scheme is more liquid. Investors can opt to withdraw their cash at anytime to meet any unforseen emergency because this scheme has no lock-in period.
- With the monthly income scheme, investors are not required to pay any processing fee to open an account. It also has a low exit-load of less than 1% of the total investment.
- Monthly income scheme earnings are higher than typical fixed deposits and the post office monthly income scheme.
- Investors are guaranted a monthly return despite the fact that the amount of the payment varies based on the financial market.
- Monthly income schemes are managed by professional fund managers who have a superior understanding of how the investing market works. They keep track of the schemes and also make all of the decisions about when and how much to convert funds between debt and equity.
Interest Rates on Fixed Deposit Monthly Income Schemes
The interest rates on these accounts tend to follow the same rates as those prescribed for the regular term deposits. They also tend to offer senior citizens a higher interest rate which can be anything from 0.25% to 0.5% over the applicable rates.
These rates are decided by the banks so it's best to confirm the exact rate with the banks before investing. With some banks, current and past employees of that banks also get higher interest rates.
If you are using a regular fixed deposit and withdrawing the interest every month to augment your income, you should know that sometimes banks will provide discounted interest rates.
Eligibility Criteria
The eligibiity criteria for opening a monthly income scheme is same as every other fixed deposit scheme. To open a monthly income scheme, you have to be:
- An individual over the age of 18
- Minors with their guardians can open a joint account
- Company
- Hindu United Family (HUF)
- Any association or institute
- NRIs
Documents Required for Monthly Income FD Scheme
The documents that are needed to open a monthly income fixed deposit account are:
- Application form
- Depositor's photograph (2 copies)
- Identity proof
- Address proof
- PAN card
- Aadhar card
How to Apply for Fixed Deposit Monthly Income Scheme?
The depositor must already have an account with the bank in order to create a fixed deposit monthly income scheme with that bank. If not, the individual must go to the nearest bank branch to open a savings account.
To open a savings account at your nearest bank branch, follow the steps mentioned below
- Step 1: They need to fill out the necessary paperwork to apply for a fixed deposit monthly income scheme.
- Step 2: For the KYC process, they must provide proof of identity and address.
- Step 3: They also have to submit 2 passport size photos.
Monthly Income Scheme (MIS) vs Monthly Income Plan (MIP)
A form of mutual fund strategy known as a monthly income plan (MIP) invests largely in debt and equities assets with the goals of generating cash flows and protecting capital. In the form of dividend and interest payments, a MIP seeks to offer a consistent flow of income.
As a result, it is frequently appealing to senior folks or retirees who do not have other significant sources of monthly income. A monthly Income Scheme (MIS) is a type of investment plan that guarantees returns to investors at an annual interest rate of 6.60%. You can receive these returns as a set monthly income.
Monthly Income Scheme FD Calculator
A monthly income fixed deposit calculator is used to calculate the monthly interest that will be earned out of an FD. To put it in simple words, an FD interest calculator can be used to determine how much interest will be payable at the end of each month on your term deposit. The BankBazaar FD interest calculator is an easy-to-use tool that can be used to calculate the interest earned on an investment.
Taxation on Fixed Deposit Monthly Income Scheme
The FD interest of FCNR and NRE accounts is exempt from income tax for depositors. However, by making an investment in a tax-saving fixed deposit scheme provided by several banks, one can claim a tax reduction.
Each financial year, the principal portion of Tax Saver FDs up to Rs.1.5 lakhs would be eligible for a tax deduction under Section 80C. However, the interest income from Tax Saver FDs would be subject to taxation based on the depositor's tax bracket.
How to Apply for Fixed Deposit Monthly Income Scheme?
The depositor must already have an account with the bank in order to create a fixed deposit monthly income scheme with that bank. If not, the individual must go to the nearest bank branch to open a savings account.
Step 1
They need to fill out the necessary paperwork to apply for a fixed deposit monthly income scheme.
Step 2
For the KYC process, they must provide proof of identity and address.
Step 3
They also have to submit 2 passport size photos.
FAQs on FD Monthly Income Schemes
- What is the interest rate of the SBI Monthly Income Scheme Fixed Deposit?
The SBI monthly income scheme fixed deposit has an interest rate ranging from 3.05% to 7.05% p.a.
- What is the minimum and maximum tenure of IDFC First Bank FDs?
The minimum and maximum tenure of IDFC First Bank FDs is seven days to ten years respectively.
- Will I get monthly interest with monthly income FD scheme?
Yes, you can get monthly interest with monthly income FD scheme.
- Is there any monthly income scheme in LIC?
LIC offers a monthly income scheme to senior citizens which has an interest rate of 7.40%.
- Can I change the tenure of my FD?
No. You cannot change the tenure of your FD once you opened it.
- What are the documents required to open an FD account?
You need to provide identity proof, proof of residence, and two passport size photos to open an FD account.
- What is interest rate offered by SBI on its FDs?
The interest rate offered by SBI on its FDs ranges between 3.05% p.a. to 7.05% p.a.
- Which plan offers the highest monthly income?
Many schemes provide monthly income options. However, the fixed deposit monthly income scheme is the best one. It has a facility for withdrawals. The account facilitates borrowing. Additionally, it provides monthly income through interest returns.
- How much will my fixed deposit scheme income be every month?
Your monthly income will be based on the monthly amount you have chosen to deposit in your fixed deposit scheme.
- How much may I deposit into the FD account for monthly income?
The amount for FD account for monthly income is set by the banks on their own. So, you need to visit the bank that you want to open your FD account with to know their minimum deposit.
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