Savers looking for a steady monthly income from a lump sum often weigh the Post Office Monthly Income Scheme (POMIS) against an SBI fixed deposit that pays interest monthly. POMIS presently offers 7.4% per annum paid monthly, whereas SBI FD payouts vary with the tenure and payout option selected.
Investors who want a reliable monthly income typically compare two options: the Post Office Monthly Income Scheme (POMIS) and an SBI fixed deposit with a monthly interest payout option. Both turn a lump sum into regular interest payments, but POMIS currently offers a higher stated rate of 7.4% per annum, paid monthly, while SBI FD rates and payout terms depend on the tenure chosen.
Why Compare Them?
POMIS is a government-backed scheme with a five-year term that pays interest monthly and returns your principal at maturity. At the current rate, a ₹1 lakh deposit earns about ₹617 per month.
SBI FD can also generate regular income if the depositor chooses the monthly interest option, but the effective monthly payout may be lower since banks usually apply a discounted rate when interest is paid frequently.
Explore in Details - SBI Monthly Income Scheme 2026: Apply Online From Home For Best Return
The Core Calculation
To generate a steady ₹1,00,000 per month , you need ₹12,00,000 per year in absolute interest payouts (₹1,00,000 × 12 months).
The corpus required depends heavily on the annual interest rate (𝑟):
Required Corpus = Annual Interest Desired/Interest Rate (p.a.)
The real question isn't just "how much monthly interest does ₹1 lakh in an FD earn," but how much capital is required to produce a target monthly income. At current indicative rates, generating ₹1 lakh a month would need:
| Feature/Metric | Post Office (MIS / Time Deposit) | State Bank of India (SBI FD) |
| Applicable Interest Rate | 7.40% (Post Office Monthly Income Scheme) | 6.25% to 6.40% (Average for standard 1–3 yr retail FDs) |
| Corpus Needed for ₹1 Lakh/Month | ₹1.62 Crores | ₹1.88 to ₹1.92 Crores |
| Account Deposit Limits | Strict Caps: Max ₹9 Lakhs for single accounts / ₹15 Lakhs for joint accounts. (You cannot put ₹1.9 Crores into a single Post Office MIS account). | No Upper Limit: You can deposit large lump sums into a single SBI FD. |
| Payout Frequency | Paid out monthly (via POMIS). | Can be customized to monthly payout (at a slightly discounted compounded yield) or cumulative. |
| Safety & Backing | Sovereign Guarantee (Backed by the Government of India). | State-backed public sector bank (DICGC insured up to ₹5 Lakhs per bank). |
What to Consider?
Payout vs. Compounding
- The calculations above assume you choose a non-cumulative FD where interest is paid out monthly. If you choose a cumulative FD (where interest is reinvested), the effective yield is higher, but you will not receive the monthly cash flow.
- Tax Impact: The ₹1 Lakh monthly figure is gross interest. It is fully taxable as per your income slab . Banks may deduct TDS if your total interest exceeds ₹50,000 (₹1 Lakh for senior citizens) in a financial year. Your actual in-hand amount will be lower after tax.
Also Read - How To Avoid TDS?
Safety
- Both options are considered highly safe. Post Office deposits carry an explicit sovereign guarantee, while SBI is a systemically important bank. Bank deposits are also insured up to ₹5 Lakh per depositor by the DICGC.
Rate Fluctuations
- FD rates are subject to change. Post Office rates are reviewed quarterly, and bank rates can change at any time. Always check the current rate before finalizing your investment.
For a conservative investor focused on steady monthly cash flow, POMIS generally offers a higher headline payout. For flexibility, the ability to deposit larger amounts, and banking convenience, an SBI monthly-payout FD can serve as a more practical complement.
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