New Delhi, June 9 (PTI) Monthly Income Scheme (MIS) of the post office remains the flagship product under small savings scheme owning to better returns. MIS alone garnered Rs 54,302 crore against the total fund generation of Rs 2,50,931 crore during 2009-10. Thus, nearly 20 per cent was contributed by the product, as per the report by Committee on Small Savings Scheme.

Since the effective rate of interest on MIS has been higher than other scheme, it is popular among those subscribers seeking regular additional income.

The product provides monthly income and yields an effective annual rate of interest of 8.82 per cent inclusive of 5 per cent maturity bonus.

Under the scheme, the depositors get Rs 80 per month for 6 years for MIS deposit of Rs 12,000. At end of maturity the money is returned along with a bonus of 5 per cent per annum.

The maximum deposit ceiling under the scheme is Rs 4.5 lakh in single account and Rs 9 lakh in the joint account.

Besides, this the other popular small savings scheme are Public Provident Fund, Recurring Deposit, Kisan Vikas Patra and National Savings Certificate.

During 2009-10, Public Provident Fund mobilised Rs 33,449 crore, Recurring Deposit Rs 30,353 crore and Kisan Vikas Patra Rs 21,167 crore.

“Whereas the term deposit rates of post offices are broadly aligned with the market rates, the effective rate of interest on MIS is significantly higher than the bank deposit rate and the G-sec yields of comparable maturities,” the report prepared by government panel noted.

Notwithstanding the rigidity in pre-mature withdrawal of the scheme, MIS is a relatively popular instrument in view of the higher than market rate of return, the panel headed by RBI Deputy Governor Shyamala Gopinath observed.

The panel recommended the MIS term be reduced to five years from the current six-years.

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