Indian Millennium Deposit Scheme

The India Millennium Deposit Scheme (MDS) is an excellent opportunity for investors seeking high returns on their investments. The Indian government offers this scheme, which is a great option for those looking to invest in the long term. 


In this blog post, we will go over how to invest in the India Millennium Deposit Scheme and make the most of it.

Investors can get benefits such as:

  • Access to a range of investment options;
  • A chance to make money without having to put in a lot of work;
  • The ability to diversify across different types of assets;
  • An opportunity to invest in long-term projects that aren’t covered by other schemes;
  • A chance to earn tax-free returns;
  • The chance to take advantage of the Indian government’s fund and get a fair return on your investment.

How does it work?

The IMD deposits are basically fixed deposits that can be opened at any scheduled commercial bank in India. The depositor has to specify the amount to be invested, the tenure of the deposit, and the maturity date. Once these details are provided, the depositor will receive an interest rate according to the RBI guidelines for the relevant period. The principal amount invested and the interest earned on the deposit will be paid out after maturity.

The primary benefit of investing in IMDs is that they offer higher returns than other fixed deposits with similar tenures. Moreover, returns are also exempt from tax under Section 80C of the Income Tax Act, of 1961. This makes IMDs an ideal option for investors looking to earn higher returns while keeping their investments secure and tax-free.

How can you get the most out of the scheme?

One way to get the most out of the IMDs is to understand the return rates offered. The return rate for an IMD is determined by the government and is based on market conditions and the performance of the economy. Generally, the rate offered is higher than that of a fixed deposit account or savings account. It is important to note that the return rates may vary from year to year.

Another way to maximize returns from your investment in the IMDs is to make sure you are investing in a secure environment. This can be done by ensuring that you are investing with a reliable and experienced bank or financial institution. Additionally, it is important to keep up with the current news related to IMDs and stay informed about any changes in policies or rules that might affect your returns.

Finally, it is also important to keep track of your investments and ensure that you are maximizing their potential by making adjustments when needed. Keeping up with developments in the IMD market can help you stay ahead of the curve and increase your chances of getting the best possible return from your investments

The Purpose of the IMDs

  • The scheme encourages Indian citizens and organizations to invest for long-term goals, offering attractive return rates on their investments. 
  • The IMDs are intended to help build up the country’s foreign exchange reserves and provide extra funds for the government to use for development projects and other public needs.
  • The scheme also provides an attractive investment alternative to traditional fixed-income securities, with potentially higher return rates than regular deposits.

Outflow from the Bonds

The bonds offered by the India Millennium Deposit Scheme are designed to provide investors with a long-term return on their investment, but they also have some restrictions on who may invest in them.

There are three types of bonds available through this program:

  • Fixed-rate bonds which have interest rates that are set by the government),
  • Floating-rate bonds which have interest rates that vary based on market conditions; and 
  • Index-linked or gilt-edged bonds have a fixed rate but also include a portion of the value invested in an underlying index. 

The Arranger and Collecting Bank


The India Millennium Deposit Scheme (IMDS) requires the participation of both an arranger and a collecting bank. 


  • The arranger is a financial institution that helps coordinate the issuance of IMDs and is responsible for marketing, selling, and distributing the bonds to investors. 
  • The collecting bank is a public sector bank that is responsible for collecting payments on behalf of the arranger and transferring the returns to investors.

It is important to note that the return rates offered by the India Millennium Deposits (IMDs) are determined by the arranger, not the collecting bank. Therefore, investors should check with the arranger to understand what return rate they will be getting when investing in IMDs. Investors should also make sure to read the terms and conditions of the bond before making a decision to invest.

Similar Schemes by RBI


The RBI offers a variety of schemes that investors can use to earn returns. One such scheme is the India Millennium Deposits (IMDs). 


The IMDs are similar to the IMD in that they also provide fixed returns over a 5-year period, with the rate of return varying depending on the amount invested. However, the IMDs provide more flexibility than the IMD, as investors can choose between 1-5 year deposit periods with different return rates. For example, the current return rate for 1-year deposits is 6.50%, while 5-year deposits provide 7.50%. This allows investors to adjust their investment plans accordingly, choosing the terms and return rates that best suit their needs. As with the IMD, there are also tax benefits associated with investing in the IMDs.


The India Millennium Deposit Scheme is an excellent investment option for those looking to earn a good return on their investments with minimal risk. The scheme offers attractive return rates, along with flexibility and liquidity that many other investments cannot match. As the Indian economy continues to grow, investors can expect to receive higher returns from their investments in the IMDs. With its low cost of entry and attractive return rates, the India Millennium Deposit Scheme is a great way for investors to increase their wealth and get the most out of their investments.