Post Offices in India have historically been involved in providing financial services for over a hundred years and one of its most well known services is the Post Office Savings Account. As a result of the wide reach of the postal system, these savings accounts hold a place of key importance for remote parts of the country where penetration of banking services is currently limited.
A post office savings account is in many ways similar to a savings account held with a scheduled bank in India with some key differences. The following are key features of a post office savings account :
- This account can be opened only with cash. Minimum initial deposit is Rs. 20.
- Maximum one account allowed at a post office branch.
- The currently applicable rate of interest for this account is 4% per annum.
- No lock-in or maturity requirements are applicable to this account.
- Interest earned on the account up to Rs.10000 per annum is tax free.
- Account is transferable from one post office to another.
- Minimum balance for non-cheque account is Rs. 50 and Rs. 500 for accounts with cheque facility.
- Account can be held singly or jointly (max. 3 joint account holders).
- At least a single deposit/withdrawal needs to be made every 3 years to keep the account active.
- Minor aged 10 year or more can open/operate the account.
- ATM facility is available for Post Office Savings Account.
- Electronic deposit/withdrawal is possible at CBS enabled post offices.
- Conversion of single account to joint account and vice a versa is allowed.
The following is the list of persons eligible to open a post office savings account (POSA):
- An Indian national aged 18 years or above can open POSA.
- Minors are also eligible if they are aged 10 years or more.
- A guardian can open this account on behalf of the minor.
- Joint accounts can also be opened by two to three persons.
- A person who is not of sound mind can also open a post office savings account.
Consequently, NRIs or Institutions are not allowed to open a post office savings account.