Post Office Savings Schemes are very popular in small towns though these schemes have lost relevance in big cities. I remember “National Savings Certificate” popularly known as NSC was most preferred investment avenue for my parent’s generation. During those days not many financial instruments were available for investment cum Tax Savings. Secondly, the biggest plus point for Post office Savings Schemes is trust factor because of Govt of India backing.
Despite have some of the Best Financial Products in the portfolio, it is not recommended to invest in Post Office Savings Schemes…Let’s find out why
1. Post Office Savings Schemes are linked to Place of Investment:
Concept is similar to Home Branch concept of Banks. Assume that you invested in one of Post Office Savings Schemes say Monthly Recurring Deposit in Worli Post office. Now, you can operate your account only through Worli Post Office. In case you shift from Worli to Chembur then you need to get your account transferred from Worli to Chembur Post Office. It’s a manual activity and might take months or in some cases years. Reason every Post Office has deposit targets and it is not in the interest of Post Office to transfer deposit account. In case, you shift from Mumbai to any other city then it will be nightmare to shift your Post Office Savings Schemes from Mumbai to another city.
2. Post Office Savings Schemes are like Currency Notes:
Though Post Office Savings Schemes like NSC or Kisan Vikas Patra carry name of the investor but in case Post Office Savings Schemes certificate is lost, stolen or damaged then investor need to run from pillar to post to claim his/her investment that too without much success. If your investment documents are stolen specially NSC or Kisan Vikas Patra then anyone with little brains can withdraw your investment easily.
3. Post Office Savings Schemes are not digitized:
Unlike other investment avenues like Mutual Funds, Equity, Gold etc it is not possible to operate your Post Office Savings Schemes account online i.e. you cannot track your account or invest online. You always need to keep your passbook updated all the time by standing in post office queues for hours. In this internet age no one prefer Stone Age mode of operation.
4. Unfriendly Post office Staff:
No offence to anyone but in my opinion, Post Office staff is very unfriendly. They treat their customers as if they are doing some big favor to customer. Despite being PSU State Bank of India and Bank of Baroda has done a commendable job in this regard. Post Office staff should be trained to be more customer friendly and professional in their approach.
5. Post Office Agents Rule the Roost:
If you have ever visited Post Office then you can co-relate what i am trying to convey. When i visited one of Post Office in Mumbai to open RD account, 5-6 agents Gheraoed me. Somehow I reached RD counter and to my surprise Post Office employee suggested me to open the RD account through Post Office agent. Post Office agents receive commission for all Post Office Savings Schemes opened through them. Food for thought is why Post Office employee is suggesting to open a deposit account though agent, We really need strong LokPal Bill.
Recently Department of Post applied for Banking License and i strongly feel that they should get Banking License because of widest reach and employee strength but before that mindset change is required. Post Office Savings Schemes are not only for a “Poor Man” but for every resident of India.
Hi Nitin,
Any idea how the annual interest component is paid to the investor?.
Do they transfer the amount to our bank account or do we need to start some sort of a savings account in the post office?
regards,
John
It depends on the mode selected by you while investing in a scheme. Now a days, amount is directly transferred to bank account through ECS.
Did agents take commission while opening PPF also?
Agents get commission from Post Office. They don’t collect any commission from the investor.
Thanks Nitin !!!
I was planning to park a small percentage of investment in post office as I have read that they don’t deduct TDS and for a 5 year term the interest is now 8.4% which is not so bad either.
The interest received is taxable as per income tax slab though TDS is not deducted still you need to pay tax. You may consider PPF option in which interest received is tax free.
My NSC certificate may have been stolen. How can someone else encash it? How can I stop this?
You may register FIR immediately and inform the post office with copy of FIR. NSC can be en-cashed by anyone. Its like currency.
HI Nitinji.
What are the new norms for receiving NSC money on maturity ? My agent informs me that it is compulsory now to open a savings account in post office so that the maturity amount will be deposited in post office savings account. Under no circumstances post office will issue a cheque for the maturity amount. Is this a fact of a story ?
There is no such rule. He is trying to cross sell a post office savings account to achieve his target. You have an option either to receive the maturity amount in CASH or in Savings account. Choice is yours. Moreover if you receive maturity amount in savings account then this account can be a Bank’s saving account. If your agent persists then provide him your existing savings account detail along with cancelled cheque.
Even my agent is saying the same thing…
can some one please re verify the above given norms, so that I can talk accordingly to my agent, and clear the same as soon as possible, as on of my NSC is getting matured soon, and I don’t want any delay in receiving the amount of maturity.
As i mentioned, you can share your bank’s savings account if the agents insist on same. Post Office Savings Account is NOT MANDATORY.
But the post master himself is telling us to open the savings account in post office for the maturity of NSC or PRD. What can be done in this situation.
As i mentioned he is achieving his targets. You can refuse and submit written request that you would like to receive maturity proceeds in your bank savings account. Provide details of bank savings account and attach cancelled cheque.
Hi Nitin,
I have NCS certificates issued from Jodhpur and Jaipur (Rajasthan) but now I am shifted to Raipur (Chhattisgarh). Will the post offices in Raipur disburse my maturity amount?
regards,
anurag
You have not mentioned whether your NSC is already matured or due for maturity. Secondly, you should check whether both the post offices i.e. post office that issued and post office where you would like to encash are linked to CBS (Core Banking Solution) or not then i will suggest next steps.
Nitin bhatia ji need information regarding mis renewal . mis is maturing this month .pls cnfm whether we can renew mis or we hv to take maturity and again invest in mis.
The auto renewal facility is not available. You have to invest again.
From where to get licences to become post office agent in Mumbai
You may check with GPO.
i am postal agent, did i get commission for rd payment made through cheque?
iam an agent of postoffice in tamilnadu and my postmaster is not acceping the cheque deposit for RD payment through me and he is saying you won’t receive commission for the cheque made by you .what can i do further?
It seems you are issuing a cheque from your bank account. In this case you will not receive commission.
I have taken NSC by myself from Post office, Is there any benefit to me against agent commision
No