Post Office Small Savings Schemes are very popular among people who want to invest their money in the Govt. run instruments. These financial instruments provide you secure investment options with guaranteed returns. In India, Post Offices have a larger reach compared to any other financial product. So in remote places, they play the key role to penetrate financial inclusion.
Even though the interest rates may not always be high, but you know that your money is safe. E.g. the rate of interest under Post Office Savings Account is just 4%, but if you want to keep your money liquid, then it might be a good option. However, there are other saving schemes in post office that will give you higher rates of interest, but you need to deposit the amount for a fixed time period.
In this article I will discuss about the different Post Office Small Savings Schemes, post office interest rate 2018 and the importance of post office saving scheme for tax benefit.
What are Post Office Saving Schemes?
Post office schemes are designed to provide financial security to general people with guaranteed return on investment. More than 1.54 lakh post offices are there In India, among which 89% is spread across the rural areas. Small Savings Schemes are operated mostly through these branches along with public sector banks. Around $137 Billion (Rs. 9 Lakh Crore) are tied up with Small Savings Scheme.
Also Govt. of India provides tax benefit to many postal saving schemes like senior citizen savings scheme, national savings scheme, Sukanya Samriddhi Account etc.
Different Types of Post Office Small Savings Schemes
Different types of post office small savings schemes that are currently functioning are as follows:
- Post Office Savings Account
- Post Office Recurring Deposit Account (RD)
- Post Office Fixed Deposit Account (FD/TD)
- Post Office Monthly Income Account Scheme (MIS)
- Senior Citizens Saving Scheme (SCSS)
- Public Provident Fund Account (PPF)
- National Savings Certificates (NSC)
- Kisan Vikas Patra (KVP)
- Sukanya Samriddhi Yojana (SSY)
Post Office Interest Rates Table 2018
Government has recently announced the interest rates for PPF, NSC, KVP and Sukanya Samriddhi for the FY 2017-18. And the post office interest rates 2018 are effective from 1st January onwards. Except the Senior Citizens Saving Scheme and Savings Account interest rates, Government has reduced around 0.2% (20 BPS) for all the schemes.
Also, the new interest rates on post office schemes have a fixed locking period except post office savings accounts. You can find the current post office interest rates table below.
|Scheme||Interest Rates 2017-18||Minimum Deposit||Investment Period|
|Savings Deposit (SD)||4.0%||Rs. 20||NA|
|1 Year Time Deposit (TD)||6.6%||Rs. 200||1 Year|
|2 Year Time Deposit (TD)||6.7%||Rs. 200||2 Years|
|3 Year Time Deposit (TD)||6.9%||Rs. 200||3 Years|
|5 Year Time Deposit (TD)||7.4%||Rs. 200||5 Years|
|5 Year Recurring Deposit (RD)||6.9%||Rs. 10/ Month||1 to 10 Years|
|5 Year National Savings Certificate (RD)||7.6%||Rs. 10/ Month||1 to 10 Years|
|5 Year Senior Citizens Savings Scheme (SCSS)||8.3%||Rs. 1000||5 Years|
|5 year Monthly Income Scheme (MIS)||7.3%||Rs. 1500||5 Years|
|15 Year Public Provident Fund (PPF)||7.6%||Rs. 500||15 Years|
|National Savings Certificate (NSC)||7.6%||Rs. 100||5 or 10 Years|
|Kisan Vikas Patra (KVP)||7.7%||Rs. 1000||9 Years 5 Months|
|Sukanya Samriddhi Account Scheme (SSAS)||8.1%||Rs. 1000||21 Years|
You can refer to India Post Official Site for more details on all the above schemes.
Features of Post Office Savings Account
- You can open an account by cash only
- One account can be opened in one post office
- The account can be transferred from one post office to another
- Nomination facility is available at the time of opening as well as after opening of account.
- You can take the cheque facility at the time of opening or later on
- A minor of 10 years and above age can open and operate an account along with a guardian
- Joint account can be opened by two or three adults
- A single account can be converted to joint account and vice versa
- To keep an account active, it is mandatory that you perform atleast one transaction in three financial years
- After reaching the age of 18, the minor has to apply for conversion of the account in his/her name.
- Deposits and withdrawals can be done through any electronic mode in CBS Post offices.
- Inter Post office transactions can be done between CBS post offices.
- CBS Post Offices can grant ATM/Debit cards to all those account holders who have maintained the prescribed minimum balance on the day of issue of card
Post Office Saving Scheme for Tax Benefit
5 out of above schemes offer tax benefits under section 80C. They are Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), National Savings Certificate (NSC), Senior Citizens Savings Scheme (SCSS) and Time Deposit Scemes.
Previously, the post office savings interest rates were fixed for many years. However, after 2011 the rates on post office investment are linked to the rates on government securities (G-Secs) of similar maturity. They are reviewed on yearly basis and Govt. of India fixes these rates on every year March.
There is another topic that needs to be covered here. That is India Post Payment Bank or IPPB.
IPPB (India Post Payment Bank)
IPPB or India Post Payments Bank is the recently launched Public Sector Bank under the Department of Posts with 100% GOI equity. It is aimed to efficient banking services to every. The first two India post payment bank branches were inaugurated at Raipur and Ranchi. IPPB is offering savings account up to a balance of Rs 1 Lakh. The IPPB interest rates are as follows:
- 4.5% interest on deposits up to Rs 25,000
- 5% interest on deposits up to Rs 50,000.
- 5.5% interest for deposits between Rs 50,000 to Rs 1 lakhs
India Post Payment Bank will soon it provide current accounts and access to third party financial services like insurance, mutual funds, pension, credit products, forex etc. Digitally enabled payments like mobile, UPI, debit cards along with remittance services of all kinds will be there too. One can use the IPPB debit card at ATMs, PoS and mobile-PoS.
IPPB bank offers 4 types of services namely, Banking Services for Everybody, Domestic Remittance Services, Direct Benefit Transfer (DBT) and Doorstep Banking. There are three types of IPPB accounts under Banking Services for Everybody. They are designed to suit the need of every Indian. The 3 accounts are:
- Regular Account – Safal
- Basic Savings Bank Deposit Account (BSBDA) – Sugam
- BSBDA Small – Saral
The Saral Account is suited for people with limited banking experience whereas the Safal Account is loaded with features.
Post Office Savings Scheme FAQ
How to open an account in post office?
You can open an account at any post office with a minimum balance. To do that, simply visit you nearest post office with the needed documents and complete the formalities. The lock-in or maturity period for different post office savings scheme are different, however, there is none for a savings bank account.
To open an account like Savings Bank (SB), Recurring Deposit (RD), Time Deposit (TD) or Monthly Income Scheme (MIS), you will need the SB3 and SB103 (pay-in-slip). Separate forms are there for senior citizen accounts. For SB account introduction is compulsory. Also, specimen signature slip is required for SB and TD. You can follow the below steps to open an account.
- Go to your nearest or preferred post office, where you want to open an account
- Ask for the post office saving account opening form. Post office savings account online opening is not yet possible, however, you can download the form online from here.
- Senior citizens have to use separate forms for post office account opening
- Fill in the form with all the needed details and submit it with the required documents
- The minimum amount varies for different post office saving schemes. Pay the initial amount that you want to deposit in your account
- Once your account is opened, you will be given the passbook
What are the documents required for post office account?
The documents you need to open an account are:
- ID Proof
Copy of any of the following – Election Card, Ration Card, Passport, Driving License, Aadhaar Card or letter issued by UIDAI (Unique Identification Authority of India), photo ID card issued by recognized University/ Education Board/ College/ School/ Central or State Government/ PSU
- Address Proof
Copy of any of the following – Electricity Bill, Telephone Bill (not more than three months old), Passport, Ration Card, Aadhaar Card or letter issued by UIDAI, Bank or Post Office Passbook/ Statement
- Two recent passport size photographs. In case of a joint account, photos of all the account holders will be needed
Make sure you carry the original documents along with some extra copies.
Who can open a post office account?
The following people can open a savings account in post office:
- Minors of age ten years and above
- A guardian on behalf of a minor
- A person of unsound mind
You can open a single account or two or three adults can open a joint account.
However, Group Accounts, Institutional Accounts and Misc. Account are not permissible. Also Trust, Regimental Fund and Welfare Fund are not authorized to open a post office savings account.
What is the minimum balance required for different postal schemes?
The minimum balance amount is different for different schemes. And they are as follows:
|Minimum balances for different PO accounts|
|SB(Cheque account)||INR. 500/-|
|SB(non Cheque account)||INR. 50/-|
|Senior Citizen||INR. 1000/-|
Is there a post office saving scheme for girl child?
In 2015, Government had launched a new small savings scheme for the girls in our country. The new scheme, Sukanya Samriddhi Account is aimed to serve the need of higher studies and marriage of a girl child. Read more about Sukanya Samriddhi Account.
How to get duplicate passbook from post office?
You can get a duplicate passbook issued from the sub post offices only. Just fill up an application in the prescribed form or manuscript application and submit it along with the prescribed fee in the form of postage stamp.
How to get cheque book from post office?
If you wish to get a cheque book at the time of opening an account, you can apply with the India post cheque book request form along with an initial deposit of Rs.500. You can also get a cheque book at any other time, if you maintain a minimum balance of Rs.500.
How to transfer post office account?
To transfer your post office savings account and any other scheme, you need apply with the post office account transfer form SB 10 (b), which is available in any Post Office. You can also download it online from the India Post website. The application can be given either in transferring or transferee office.
What is a silent account and how to revive it?
A silent account in post office is one, where there is no transaction in an SB account continuously for 3 financial years. If the balance in the silent account is less than the minimum limit, then it will be debited towards service charges.
To revive such account, the customer needs to apply with an application from. LSG/HSG offices can revive the accounts independently. Remaining offices, HO will revive the accounts.
What are the rules for premature closure?
|Premature closure for different PO accounts|
|SB||Can be closed at any time|
|RD||Premature closure permissible after 3 years – only SB rate is permissible|
|TD||Premature closure permissible after 6 months|
|MIS||Premature closure permissible after 1 year|
|Senior Citizen||Premature closure after 1 year|
|PPF||Premature closure after 5 years on account of serious ailment/ to fund higher education|
|NSC (VIII Issue)||Premature encashment is possible only in case of death, court order or forfeiture by a pledgee|
What happens after the death of the depositor?
In case of a joint account, the other partner will be the sole owner of the account and can continue to perform the account activities. In case of a single account, the amount shall go to the nominee after the death of depositor. If the account is without nomination at the time of the depositor’s death, the Department of Post Office may pay the same to any person appearing to him, who is entitled to receive it or to administer the estate of the deceased, when the amount due does not exceed the limit of Rs. 60000.
Can NRI invest in post office schemes?
Investments under Indian post office NRI account can be continued till maturity, in case they are started before becoming a Non Resident Indian. However fresh investments cannot be made under these schemes.
Therefore it is clear that, some of the post office small savings schemes offer higher returns compared to many other saving schemes. So, if you are a low risk taker, it might be a good choice to deposit in PO schemes for a longer time period. Now, do you prefer to invest in small deposit schemes? Are you happy with the post office interest rates 2018? Please feel free to share your thoughts and experiences of investing in post office savings account.