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.
The current rate of interest offered on Post Office Savings Account balance is 4% p.a. computed on monthly basis and credited annually. The rate is subject to periodic change as per announcements made by the Finance Ministry. However no such changes in interest rates have been announced in the past year. Historical Post Office Savings Account interest rates are as follows* :
|Period||Rate of Interest on Post Office Savings Account|
|1st April 2018 – 30th June 2018||4.0%|
|1st January 2018 – 31st March 2018||4.0%|
|1st October 2017 – 31st December 2018||4.0%|
|1st July 2017 – 30th September 2017||4.0%|
|1st April 2017 – 30th June 2017||4.0%|
*Change in interest rates is notified periodically by the Finance Ministry.
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.