Post Office Monthly Income Scheme: How are POMIS deposits affected by interest rate changes?

The revision of the Post Office Monthly Income Scheme (POMIS) interest rate does not affect the existing deposits. However, new accounts can be affected based on whether the interest rate has been increased or decreased.

As the Finance Ministry is expected to announce the Post Office Monthly Income Scheme interest rate for the October-December quarter of FY 2025-26 on Wednesday, September 30, 2025, here's a look at how a change in interest rate affects POMIS account holders.

How does the POMIS interest rate work?

The Finance Ministry declares the Post Office Monthly Income Scheme interest rate every quarter. The scheme is popular among senior citizens and others for safely providing a monthly income against a lump sum investment. The monthly income depends on the interest rate at the time of the initial investment.

Currently, POMIS is offering 7.4 % interest. The National Savings (Monthly Income Account) Scheme, 2019 says the following about interest payment:

"Interest shall be payable to the account holder on completion of a month from the date of deposit...If the interest payable every month is not claimed by the account holder such interest shall not earn any additional interest."

Impact of KVP interest rate hike or cut

Like SCSS, KVP and Post Office Time deposit, interest rate changes in POMIS apply only to new accounts opened during the quarter in which the revised rate is announced.

This means:

⦁ If the finance ministry increases the POMIS interest rate, only new investors (or fresh deposits after account maturity/extension) will benefit from the higher rate.

⦁ Existing POMIS account holders continue to earn the interest rate that was in effect when they opened or extended their account.

So, if an individual has currently invested in POMIS at 7.4%, a later rate cut will not affect his/her returns. Similarly, an increase in interest rate will also not have any effect on an existing POMIS account holder.

If the Finance Ministry revises the Post Office Monthly Income Scheme interest rate, then the new rate will apply only to new deposit accounts.

For an individual account holder, the POMIS interest rate is fixed for the entire tenure once you invest. This is different from schemes like PPF and SSY where the interest rate can change even before maturity. So, any rate hike or cut only affects new investments or renewals made after the rate change, not the existing POMIS accounts.

More about the impact of interest rate changes on other small savings schemes:

• How interest rate change affects existing and new KVP account holders
• National Savings Certificate: Can NSC interest rate change affect existing investments?
• Post Office Time Deposit: Does the change in interest rate affect existing FDs?
• Senior Citizen Savings Scheme: How does a change in interest rate affect senior citizens?
• Sukanya Samriddhi Yojana: How SSY account holders are impacted by interest rate change
• Public Provident Fund: Impact of interest rate changes on PPF deposits explained

What this means for you:

POMIS currently allows an individual to invest up to ₹9 lakh in a single account and ₹15 lakh in a joint account.

• If you invest ₹9 lakh in POMIS today at 7.4%, you will receive a monthly income of ₹5,550. An investment of ₹15 lakh in a joint account will help you receive ₹9,250 per month.

• However, if the government announces a rate hike, only new deposits will get the higher interest rate.

• Similarly, if the interest rate drops, existing POMIS accounts won’t be affected until maturity or renewal.

Ahead of the small savings scheme interest rate announcement, POMIS account holders are expecting a hike in the interest rate. However, nothing can be confirmed at this time. Moreover, any hike or cut will not have any effect on their existing investments under the scheme.