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Monthly income schemes (MIS) are term deposits with monthly interest payout. The scheme is also called traditional fixed deposit in contrast to cumulative fixed deposits where the interest is compounded quarterly and paid out at maturity. The interest on monthly income schemes are paid monthly at the discounted value. Monthly interest schemes are an alternative to cumulative term deposits (FD/ RD) and are offered as an investment instrument by the post office and banks in India.

The formula for calculating MIS interest is based on the formula for simple discount:-

d = (A-P) / (A/12)

M = P×d/12

Where,

M = Monthly interest payout

d = Simple discount or Monthly discount rate

A = Amount due after a month using simple interest

P = Investment amount

Disclaimer:- The content of this website does not constitute financial advice and is solely meant for information purpose. The calculations are accurate as per the prescribed formula.