Bank of Baroda Monthly Income Plan (MIP)

The Bank of Baroda "Monthly Income Plan" (MIP) is essentially a standard Fixed Deposit with a monthly payout frequency. As of February 2026, the highest yield for general citizens is on the BoB Square Drive (444 Days) scheme at 6.45% p.a. (monthly payout approx. ₹537 per ₹1 Lakh). Senior Citizens get 6.95%, and Super Seniors (80+) get 7.05%.

Many users confuse this with the "Post Office MIS." They are different. The Post Office MIS currently offers a higher fixed rate (~7.4%), whereas the Bank of Baroda MIP fluctuates with the standard FD rates and allows for more flexible tenures (1 to 10 years).

Checklist

• BoB Savings Account: Mandatory. The monthly interest is credited here, not given as cash.
• Minimum Investment: ₹1,000 (standard FD) or ₹15 Lakhs (for Non-Callable "Advantage" deposits which offer higher rates).
• The Hidden Requirement: The 15G/15H Form Submission. In a Monthly Income Plan, TDS (Tax Deducted at Source) is the biggest enemy. If your annual interest crosses ₹40,000 (₹50,000 for Seniors), BoB will deduct 10% from your monthly payout automatically unless this form is active.

Step-by-Step Guide (Digital Execution)

• Step 1: Launch 'bob World'
  Login to the app. Go to Save > Fixed Deposit > Open Fixed Deposit.
• Step 2: Select the "MIP" Mode
  Do not select "Cumulative" or "RIRD". You must select "Non-Cumulative" (sometimes labeled as "Interest Payout").
  Critical Setting: Set Payout Frequency to "Monthly". (Default is often Quarterly).
• Step 3: Choose the "Square Drive" Tenure
  Manually enter 444 Days or select the specific "BoB Square Drive" scheme from the dropdown. This specific tenure currently offers the highest rate (approx. 0.50% higher than a standard 1-year FD).
• Step 4: Verify the Crediting Account
  Ensure the "Interest Credit To" field points to your active Savings Account. Do not let it default to "Renew Principal & Interest" or you won't get the monthly income.

How It Works & Hidden Details
The "Discounted" Reality:
In a cumulative FD, interest compounds (interest earns interest). In an MIP, you strip the interest out every month, so it never compounds.

The Simple Math:
If the rate is 6.45% per year, the calculation is:

Monthly Payout = (Principal Amount x 6.45%) / 12

For a deposit of ₹10 Lakhs, this works out to:
(10,00,000 x 0.0645) / 12 = ₹5,375 per month (pre-tax).

Senior vs. Super Senior:
BoB has a distinct "Super Senior" category (80+ years). They receive an additional 0.10% over the Senior Citizen rate.

• General: ~6.45%
• Senior (60-80): ~6.95%
• Super Senior (80+): ~7.05%

Things to Watch Out For

• Risk 1: The "Quarterly" Default Trap. Many banking systems default to Quarterly payouts (every 3 months). If you miss changing this toggle during setup, you will face cash flow gaps. Changing it later usually requires closing and reopening the FD (with a 1% penalty).
• Risk 2: TDS Erosion. If you fall in the taxable bracket, the bank deducts 10% TDS. So, a ₹5,375 payout becomes ₹4,837 credited to your account. You must file your ITR to claim a refund if your total income is below the taxable limit.

Frequently Asked Questions

• Q: Is BoB MIP better than Post Office MIS?
  A: No, strictly in terms of returns (Post Office is ~7.4%). However, BoB is better for liquidity (you can close it online instantly in emergencies; Post Office requires a physical visit and has a stricter lock-in).
• Q: Can I get a loan against this MIP?
  A: Yes. You can take an overdraft of up to 90% of the deposit value. The monthly interest will continue to credit, but it will go towards servicing the loan interest.

Update: Additional Details & Recent Changes

• RBI Repo Rate Status (Feb 2026):
  As of the Monetary Policy Committee (MPC) meeting concluded on February 6, 2026, the RBI has kept the repo rate unchanged at 5.25%. This follows a 25 bps cut in December 2025. This stability suggests that BoB interest rates are likely to remain at current levels through the first quarter of 2026.
  
• Updated Super Senior Citizen Benefits:
  For the BoB Square Drive (444 Days) scheme, Super Senior Citizens (aged 80+) are now eligible for a yield of 7.05% p.a., which is a 0.60% premium over the general public rate.
  
• BoB Earth Green Term Deposits:
  If looking for an alternative to the Square Drive, the "BoB Earth Green" scheme (introduced for sustainable financing) offers 6.25% for 1111 days, with Seniors getting 6.85% and Super Seniors getting 6.95%.
  
• TDS Threshold Adjustments:
  For the 2025-26 assessment year, the TDS exemption limit on deposit interest remains ₹40,000 for general citizens and ₹50,000 for senior citizens. However, with the current 2026 budget discussions, always verify if you need to submit a fresh Form 15G/15H at the start of the new financial year in April to avoid the 20% "No-PAN" deduction penalty.
  
• Digital "bob World" Limits:
  Opening an MIP via the app is restricted to ₹2 Crore for most retail users. Deposits above this threshold are classified as "Bulk Deposits" and often require a branch visit or the "Baroda Advantage" (Non-Callable) workflow to access the differential rates.
  

As of February 2026, the highest yield for general citizens is on the BoB Square Drive (444 Days) scheme at 6.45% p.a. (monthly payout approx. ₹537 per ₹1 Lakh).

Update: While 6.45% is the standard Callable rate, the Non-Callable variant of the same 444-day tenure offers 6.50% p.a. for General Citizens, provided the investment is above ₹1 Crore.