Post Office Savings Account- Interest Rates & Features

About Post Office Savings Account

Post Office Savings Account is similar in many ways to a regular savings account. It is considered to be a highly secure instrument to deposit funds into and offers the option of full or partial liquidation of funds at very short notice in case the need arises. These accounts generally offer a guaranteed return on investment and are ideal for senior citizens and people who are looking to earn a regular income without exposure to risk

Post Office savings accounts are also best suited for those individuals living in rural and semi-rural areas, which have limited exposure to banking. Due to the large network of post offices in India, the government introduced the concept of opening savings accounts through post offices, especially since the country-wide reach of post offices is far greater than banks.

How to Open Post Office Savings Account 

In order to open a Post Office Savings Account, you need to be an Indian and an adult. A minor will have to be a minimum of 10 years to be eligible for opening a Post Office Savings Account. For opening a joint post office savings account, 2 or 3 individuals are required.  

For opening a post office savings account, one should follow a few simple steps. Let us take a look at them: 

• Visit your nearest post office or the official website of India Post and get the application form. 
• Next, you will have to fill the form with appropriate information, furnish the relevant documents, and your passport size photograph. 
• Next, you will be required to pay a deposit amount, which cannot be lower than Rs.20. 
• If you want to get a post office savings account without a cheque book, you will then need to pay a deposit amount of at least Rs.50. 
• If you are a senior citizen, you will get a separate application form. 
• After you make the payment, your post office savings account will be ready

A Post Office savings account can be opened at any post office with a minimum balance of Rs 20. Single account holders can deposit a maximum of Rs one lakh while joint account holders can deposit a maximum of Rs two lakhs. One of the main features of a Post Office savings account is that there is no lock-in or maturity period. Opening an account of this kind is relatively hassle-free, since one can walk into any post office, complete the formalities with the clerk, and open an account immediately.

Interest rate for the first quarter of Financial year 2018-19

Eligibility to Open Post Office Savings Account

The following individuals are eligible to open a Post Office savings account

• Adults
• Minors with a minimum age of ten years
• A guardian on behalf of a minor
• A person of unsound mind
• Two or three adults can open a joint account

However, Group Accounts, Institutional Accounts and other accounts like Security Deposit Accounts & Official Capacity Accounts are not permissible.

Post Office Savings Account Withdrawals

In a Post Office savings account the amount deposited can be withdrawn at anytime as per the depositor’s needs. The withdrawal is, however, subject to the maintenance of a minimum balance of Rs. 50 in a simple account and Rs. 500 for cheque facility accounts.

Features of Post Office Savings Account

The main features of a Post Office savings account are:

• The depositor can choose to close the account at any time of his or her choosing
• The account can be opened by cash only
• Nomination facility is available at the time of opening the account as well as after opening the account
• Interest earned is tax free up to Rs 10,000 per year from financial year 2012 - 13
• Income tax relief is available on the amount of interest under the provisions of section 80L of the Income Tax Act.
• The account can be transferred from one post office to another
• Single accounts can be converted to joint accounts and vice versa
• Deposits and withdrawals can be done through any electronic mode in CBS Post offices.

Post Office Savings Accounts Benefits

Customers who wish to open these accounts have access to cheque and ATM facilities. Some attractive Benefits of Post Office Savings Accounts have been listed below:

• Cheque facility: Cheque facility is available and can be request for existing accounts as well.
• ATM/Debit card: For those account holders who have maintained the prescribed minimum balance on the day of issuance of the debit card, CBS Post Offices can grant ATM/Debit cards.
• Minor Accounts: Post Office Savings Account is available to minors. For minors below the age of 10, an account can be opened in their name, but the parent or guardian will be given rights to operate the account on their behalf. Minors of 10 years and above can operate the account on their own.
• Portability: If you shift your residence or are not happy with the services of the post office branch or for any other reason, you can shift your Post Office Savings Account to a branch of your choice. Only one account can be opened in one post office.
• Nomination: The facility to nominate someone is made available under these accounts at the time of opening the account. The account holder can also choose to nominate a person to receive the proceeds of this account after their demise at any time.
• Joint Holdings: Two or three adults are allowed to hold an account together under the joint account facility. A single account can be converted to a joint account and vice versa.
• Tax Exemptions: Two or three adults are allowed to hold an account together under the joint account facility. A single account can be converted to a joint account and vice versa.
• Electronic Facilities: Customers can make withdrawals and deposits through any electronic mode in CBS Post offices.
• Long period for Inactivity: In order to keep the account active you only need to carry out one transaction of a deposit or withdrawal in 3 financial years. The account will not be deemed inactive unless there are no transactions for 3 financial years.

Post Office Savings Accounts Interest Rate

Post Office savings account interest rate is decided by the Central Government from time to time and is generally between 3% to 4%. Interest is calculated on monthly balances and credited annually.

Post Office Savings Accounts earn a fixed rate of interest through the year, subject to change from time to time, as declared. Currently, the interest rate is as given below:

Charges and Requirements of Post Office Savings Accounts

FAQ’s

1. What happens to the amount in the event of the death of the depositor?

If the depositor dies the amount shall go to the nominee. In case the account is without a nomination at the time of the depositor’s death and the amount due is not exceeding Rs 60,000, the Department of Post Office may pay the same to a person appearing before him, who is entitled to receive it or to administer the estate of the deceased.

2. How many accounts can be opened at one post office?

Only one single account and one joint account can be opened at one post office

3. How can a person avail of the cheque system facility for a post office savings account?

Application for availing the facility of Cheque System be submitted on Form SB/CQE-4 and requisition for fresh Cheque Book for Savings Account on Form SB/CQE-4A.

4. What is the procedure for opening a Post Office Savings Account?

Opening a Post Office Savings Account is very simple.

• Procure a form from the post office or online.
• Submit the duly-filled and signed form along with the required KYC documents and a photograph.
• Pay the amount you would like to deposit subject to a minimum of Rs.20.
• Your deposit will be opened for you.
• For senior citizens, there are separate forms available.

5. What are the documents required to open a Post Office Savings Account?

You need to comply with the KYC norms according to your risk category. Generally, to open a savings account at the post office, you need to submit the following:

• ID Proof such as Electoral Photo Identity card, Aadhaar or the letter issued by the Unique Identification Authority of India (UIDAI), Ration Card with photograph, Passport, Driving License, Photo Identity Card issued by recognized, University/ Education Board/ /College/School, Identity card from Central/State Government or PSU.
• Address Proof such as Bank or Post Office Passbook/Statement with current address Passport, Ration Card with current Address, Electricity Bill, Telephone Bill of not more than three months old, Salary Slip of reputed Employer with current address, Aadhaar or the letter issued by the Unique Identification Authority of India (UIDAI).
• One (two in case of EDBO) recent Passport Size Photographs are to be given. In case of Joint Account, photograph of all joint holders should be given.

6.Can I apply for a duplicate passbook?

You can get a duplicate passbook from the sub post offices only. To apply for a duplicate passbook, fill up an application in the prescribed form or manuscript application and submit it along with the prescribed fee, if any, in the form of postage stamp.

7.What are the norms for issuing a Cheque Book?

To be eligible for a cheque book at the time of opening an account, you must make an initial deposit of Rs.500. If you wish to get a cheque book at any other time, you must maintain a minimum balance of Rs.500 in your account and request the post office to issue a cheque book.

8.Can I transfer my post office savings account from one post office to any other post office? 

Yes, you can shift your savings account from 1 post office to another. 

9.If I have an individual post office savings account, can I modify it to a joint savings account? 

Yes, you are allowed to modify your individual post office savings account to a joint post office savings account. You may also do vice versa, wherein, you can change your joint account to an individual account. 

10.Do post office savings accounts come with debit or ATM cards?

There a few core banking post offices that provide customers with debit or ATM card options

11.For keeping my post office savings account active, what is the minimum number of transactions needed? 

To keep your account active, you will be required to make at least one deposit or withdrawal transaction in a period of 3 financial years. 

12.What is the rate of interest for Joint Post Office Savings Accounts?

For joint and individual post office savings accounts, the rate of interest is 4% p.a. 

13.Where can I get a new duplicated passbook?

You can get a new duplicated passbook only at sub post offices.