Want To Keep Your Money In A Post Office? Here Are Some Investment Options Available Today

NDTV May 15, 2019 04:40 am
Want To Keep Your Money In A Post Office? Here Are Some Investment Options Available Today

India Post, with its network of more than 1.5 lakh post offices across the country, offers a range of banking services to the public. These include financial products such as savings bank accounts (Post Office Savings Account) and fixed deposits (under the Post Office Time Deposit Savings Scheme). One can access at a post office nine types of investment/deposit options under Government of India's small savings schemes portfolio. These are: Post Office Savings Account, National Savings Recurring Deposit Account, National Savings Time Deposit Account, National Savings Monthly Income Account, Senior Citizens Savings Scheme Account​, ​Public Provident Fund Account, National Savings Certificates Account​, Kisan Vikas Patra Account and ​Sukanya Samriddhi Account, according to India Post's website - indiapost.gov.in. India Post office also provides accounts under the National Pension System (NPS) (all citizens model), which is a voluntary pension scheme managed by the PFRDA or Pension Fund Regulatory and Development Authority. (Also read: SBI, India Post fixed deposit maturity options compared | Post office interest rates compared here)

Here are key details of the interest rates, lock-in periods and investment limits applicable to some of the banking services provided by India Post in designated post offices:

(Also read: Five types of bank accounts one can operate in a post office)

Post office savings account interest rates

Deposit in a post office savings account fetches interest at the rate of 4 per cent per annum, according to the India Post website. 

Post office savings account investment/balance requirements

A Post Office Savings Account can be opened against a minimum deposit of Rs 20. For a savings account without subscription to the post office's cheque book facility, a minimum balance of Rs 50 to ensure operability. For subscription to the cheque book facility, the savings account is to be opened with a minimum deposit of Rs 500, and for this purpose, minimum balance of Rs 500 is required to be maintained, according to the post office portal. India Post also provides internet banking services for its savings bank accounts.

India Post Payments Bank savings accounts, current account

India Post Payments Bank (IPPB), which is also operated under the Department of Posts, offers savings and current accounts, money transfer and direct benefit transfer services as well as bill/utility payments.

The India Post payments bank offers three types of savings bank accounts: regular, digital and basic. Among other features, all three types of IPPB savings bank accounts do not require the account holder to maintain any particular balance, meaning the account can be operated with zero balance.

Type of accountInterest rateMinimum amount for opening accountMaximum balance allowed
Post Office Savings Account4% per annumRs 20-
IPPB Regular Savings Account4% per annumNilRs 1 lakh (end of day balance)
IPPB Digital Savings Account4% per annumNilRs 1 lakh (end of day balance)
IPPB Basic Savings Account4% per annumNilRs 1 lakh (end of day balance)
IPPB Current AccountNANilRs 1 lakh (end of day balance)
(Source: India Post, IPPB websites)

IPPB, however, requires its current account holders to maintain a monthly average balance - the average of daily balances in a month - of Rs. 1,000, according to the bank's website.

Interest rates applicable to other small savings scheme in a post office

The nine savings schemes at the post office offer interest rates in the range of 7 per cent to 8.7 per cent.

Savings schemeInterest rate
Post Office Savings Account4%
National Savings Recurring Deposit Account7.30%
National Savings Time Deposit Account7-7.8%
National Savings Monthly Income Account7.30%
Senior Citizens Savings Scheme8.70%
Public Provident Fund8%
National Savings Certificates8%
Kisan Vikas Patra7.70%
Sukanya Samriddhi8.50%
(Source: indiapost.gov.in)
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A comparison of lock-in periods and investment limits applicable to small savings scheme accounts in a post office

Savings schemeMaturity periodInvestment limit
Post Office Savings Account-Minimum Rs 20 for opening account
National Savings Recurring Deposit Account5 yearsMinimum Rs 10 per month, no maximum limit
National Savings Time Deposit Account1/2/3/5 yearsMinimum Rs 200, no maximum limit
National Savings Monthly Income Account5 yearsRs 1,500 - Rs 4.5 lakh in single account/Rs 9 lakh in joint account
Senior Citizens Savings Scheme5 yearsRs 1,000 - Rs 15 lakh
Public Provident Fund15 yearsRs 500 - Rs 1.5 lakh per financial year
National Savings Certificates5 yearsMinimum Rs 100, no maximum limit
Kisan Vikas Patra2.5 yearsMinimum Rs 1,000, no maximum limit
Sukanya Samriddhi-Rs 1,000 - Rs 1.5 lakh per financial year
(Source: indiapost.gov.in)

The savings schemes of Time Deposit, Recurring Deposit, Monthly Income, Senior Citizens, PPF, NSC and Kisan Vikas Patra come with a lock-in period - also known as maturity period - of one year to 15 years, according to the India Post website.

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Post office certificate-based investment schemes

One can set up a variety of bank accounts at the post office. Out of the nine small savings schemes, Kisan Vikas Patra and National Savings Certificate (NSC) are certificate-based investment schemes. 

Post office savings schemes income tax benefits

Investment in three of these small savings schemes offered by the post office is eligible for a deduction in taxable individual income up to Rs. 1.5 lakh in a financial year under Section 80C of the Income Tax Act. These post office schemes are: National Savings Time Deposit (five years), Public Provident Fund (15-year) and Senior Citizen Savings Scheme.

(Also read: How post office National Pension System (NPS) account works)

NPS account in a post office

National Pension System (NPS) enables the subscriber to set his or her own choice for fund allocation to different asset classes, such as government securities, equity market instruments, corporate debt and alternative investment funds. 

(Also read: Investment choices available under NPS explained)

Investment in NPS (all citizen model) is eligible for an additional tax benefit up to Rs.50,000 in a financial year, according to the post office website. 

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