Best Monthly Income Plans from Banks

Best Monthly Income Plans from BanksBest Monthly Income Plans from Banks


There are many individuals who want to invest some money and get regular monthly income. In the old age, an individual is left with no income source to meet his daily necessities. For such people, the banks have come up with the opening up of monthly income plan accounts. How do these Monthly Income Plans in Banks work? Which are the best Monthly Income Plans from Banks? What are its major features?

What are Monthly Income Plans (MIP) from Banks


Monthly income plans provide fixed monthly income to the depositor by way of interest for a specified period by keeping the principle amount intact. The scheme attracts especially the retired people who have no pension income. It also attracts investors who want to invest lumpsum and keen to get regular monthly income. The account (single or joint) can be opened in the name of individuals, minors, HUF, partnership firms, limited companies, government bodies, clubs, association etc. to meet their monthly requirement of cash. The minimum amount is Rs. 1,000 and the amount so deposited should be in the multiples of 1,000 only. The maximum period for which the account is opened varies from bank to bank.

Also Read: Top 10 MIP Monthly Income Plan Mutual Funds for regular income

Best Monthly Income Plans from Banks


There are hosts of banks that offer this scheme, but here is the detail of monthly income plans from some of the best banks:

Bank of Baroda Monthly Income Plan (MIP)


The deposit account can be opened with a minimum balance of Rs. 1,000 and subsequent deposits in the multiples of Rs. 100. The deposit tenure can range between 1 year to 10 years.  Interest will be paid monthly on a discounted basis. The tax so received monthly is subjected to same tax treatment as other interest incomes. The current rate of interest is 7.3% for general public and 7.8% for senior citizens. If a person (not senior citizen) invests Rs. 5,00,000 in such scheme, he would get approx  Rs.3042 per month as interest. More info can be found at this link. http://www.bankofbaroda.co.in/pfs/monincome.asp

Union Bank Monthly Income Scheme


All resident individuals are eligible to open this ‘Monthly Scheme Account’ in single or joint name. It can be opened for a minimum period of 6 months. The deposits can be made for a maximum period of 10 years. Interest is credited to the current or saving account of the depositor during the last week of every month. Senior citizens are offered a .5% additional rate of interest for deposits placed for 1year and above.

Allahabad Bank Monthly Income Plan (MIP)


This account can be opened for a maximum period of 5 years. Interest is compounded every quarter, however, paid every month. Interest rates range between 7% to 7.25% per annum. The monthly installment is payable at discounted rate. Finance is generally not allowed on this account, but may be granted in special cases.

Also Read: Latest Post Office Interest Rates for Nov-2016

Bank of Maharastra Monthly Income Deposit Scheme


The deposit account can be opened with a minimum balance of Rs. 1,000 and subsequent deposits in the multiples of Rs. 100. The deposit tenure can range between 1 year to 10 years.  Interest will be paid monthly on a discounted basis. The current rate of interest is 7.25% to 7.3% for general public and 7.8% for senior citizens. You can check for more info here.

Are there any drawbacks in Monthly Income Plans offered by Banks?


The biggest drawback of this account is that the interest so received is very low as compared to normal accounts. Generally, senior citizens are offered a higher rate of interest, something between 0.25% to 0.5%, over and above the applicable rates. While crediting the interest, TDS has to be realized as applicable. However, in exceptional cases, loans may be allowed to needy customers, on written request, up to 90% of the principal amount. The amount of monthly interest is then adjusted with the liquidation of the loan and not paid to the depositor.

Conclusion: The scheme of monthly interest bank account is good for retired persons for a regular flow of income, but currently, the returns under this scheme is not as attractive. Instead, one can opt for quarterly income to ensure a slightly higher rate of interest. Another option that can be exercised is to transfer the money deposits from banks to Non Banking Financial Corporations (NBFC). Like Bajaj Finance monthly interest scheme is offering 8.14% of interest rate on a 2 to 5 year deposit. But, invest in such schemes only in AAA rated company FDs. A single rate of interest is not given in many of the banks. There are so many clauses attached to every bank and there are so many interest rates that it is not possible to calculate with a single rate of interest.

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Suresh

Best Monthly Income Plans from Banks

8 comments

  • Rajat Monga

    I am prospective investor and was looking for some radical investment options. Can you suggest some? Recently heard about P2P lending and was thinking of investing some amount.

    • Hi Rajat, P2P investments provides high returns, however they are high risk too. You can invest in mid-cap funds or mid-cap stocks which can fetch you high returns. You can also try sector based mutual funds like Pharma and Banking.

  • Lakshya

    Suresh, I want to apply for karnataka bank rights issue. Can u elaborate the method to apply i.e., can i do it through my broker or do I need to visit a bank branch. I am yet to buy the shares, which I plan to buy on Monday & thereafter apply for rights issue. An early reply shall be highly appreciated.

  • Janak Giri

    Thanx sir.

  • C.Madhu

    In the conclusion part..
    The monthly interest scheme is god for the investors should be read as good for the investors , there is a spelling mistakes and needs correction

    Madhu

  • Rohit Chaudhari

    I feel senior citizens should keep away from company FDs. Instead they should invest in least risky debt funds.

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