The formula: principal × annual rate ÷ 12
For the maximum single-account deposit of ₹9,00,000 at the current 7.4% p.a. rate: ₹9,00,000 × 7.4% ÷ 12 = ₹5,550 paid out every month for the full 5-year tenure.
A smaller deposit, proportionally smaller income
A ₹5,00,000 deposit at the same 7.4% rate gives ₹5,00,000 × 7.4% ÷ 12 = ₹3,083.33 a month — proportionally smaller, since the formula is a straight percentage of whatever principal is deposited.
What happens over the full 5-year tenure
For the ₹9,00,000 deposit, the ₹5,550 monthly payout over 60 months adds up to ₹3,33,000 in total interest — and the full ₹9,00,000 principal is returned separately at maturity, unchanged.
Why the interest never compounds
Each month's interest is paid out to you rather than added back to the deposit, so next month's interest is always calculated on the same original principal — there's nothing left inside the account to compound. This is a deliberate design choice for an income scheme, but it means POMIS earns less total interest than a scheme that reinvests interest, as the companion article comparing post office savings schemes shows directly.