Post Office

History of Post Office Saving Bank

The post office saving bank in India was established in the year 1860 after the great success of the Post office saving bank schemes introduced in England. Foundation laid down in India in 1833 when the first bank was opened in Calcutta. The maximum deposit was limited to Rs. 500 at the rate 4.00% with a limit of Rs. 3000/-. First District saving banks were introduced from 16.05.1870 in India, work was to be done by presidency banks & their branches where ever they existed & by the District & Tehsildar Treasuries elsewhere.

On 1 April 1882, the Post Office Saving Banks were opened in all over India except Presidency of Bombay. In Madras Presidency, it was limited to certain places & in the Bengal Presidency; no P.O SB was established in Calcutta or Howrah. The District Saving Banks were also allowed to function. The immediate result was addition of 4066 PO SB on 31.03.1882. the PO SB had 39129, accounts with a balance of Rs. 27,96,796/- which reached to Rs. 26,44,56,655 accounts with balance Rs. 6,189,430.26 million as on 31 March 2011 making the post office saving bank the largest bank of the world. On 1 April 1982, PO SB celebrated the 100 year anniversary of its existence.

Post Office Savings Schemes-Account

This account is similar to a bank savings account. Post office savings account is especially suited for those living in rural and semi-rural areas where the reach of banks is very limited.

Post Office Recurring Deposit

It is like a sip where you deposit a fixed amount of money every month for a period of 60 months. Despite the 60 month tenure, early withdrawals are allowed subject to penalties. You cannot borrow against these deposits. Rate of interest is 8.40%. Maturity value of a 5 Years RD account opened on or after 1.4.2012 with monthly deposit of Rs. 10/- shall be Rs. 746.51. Can be continued for another 5 years on year to year basis. One withdrawal upto 50% of the balance is allowed after one year.

Time Deposit Account

Any individual (a single adult or two adults jointly) can open an account. Group Accounts, Institutional Accounts, Trust, Regimental Fund or Welfare fund are not allowed to invest. 1 Year, 2 Year, 3 Year and 5 Year Time Deposits can be opened. In case of premature closure of 1 year, 2 Year, 3 Year or 5 Year account on or after 01.12.2011, if the deposit is withdrawn after 6 months but before the expiry of one year from the date of deposit, simple interest at the rate applicable to from time to time to post office savings account shall be payable. In case of premature closure of 2 year, 3 year or 5 year account on or after 01.12.2011, if the deposit is withdrawn after the expiry of one year from the date of deposit, interest on such deposits shall be calculated at the rate, which shall be one per cent less than the rate specified for a period of deposit of 1 year, 2 year or 3 years as mentioned in the concerned table given under Rule 7 of Post office Time Deposit Rules. Rate of interest – 8.20%, 8.30%, 8.40%, 8.50% compounded quarterly for 1,2,3 & 5 years Term Deposit account respectively. The investment in the case of 5 years Term Deposit qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Monthly Income Scheme (MIS) Account

This is safe & sure way to get a regular monthly income. This account is specially suited for retired employees/Senior Citizens or any one with high sum for investment. Rate of interest is 8.50% and maturity period is 5 years. No bonus is payable on maturity with effect from 1/12/2011. Auto credit facility to savings account is available.

Public Provident Fund Account

Ideal investment option for both salaried as well as self employed classes. Non-Resident Indians (NRIs) are not eligible. Investment up to Rs. 1,00,000 per annum qualifies for IT Rebate under section 80 C of IT Act. The rate of interest on the subscriptions made to the fund on or after 01.12.2011 and balances at credit of the subscriber in the existing PPF account shall bear interest at the rate of eight point eight per cent (8.80%) per annum. Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011. Withdrawal permitted from 6th financial year. Free from court attachment. An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.

National Savings Certificates (NSC)

NSC VIII Issue: Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. No maximum limit for investment. No Tax deduction at source.
Certificates can be kept as collateral security to get loan from banks. Investment up to Rs. 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act. Trust and HUF cannot invest. Rate of interest 8.60%. Maturity value of a certificate of Rs. 100/- purchased on or after 1.4.2012 shall be Rs. 152.35 after 5 years.

NSC IX Issue: No maximum limit for investment. Rs. 100/- grows to Rs. 234.35 after 10 years. Minimum Rs. 100/- No maximum limit available in denominations of Rs. 100/-, 500/-, 1000/-, 5000/- & Rs. 10,000/-. A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. Rate of interest 8.90%. Maturity value of a certificate of Rs. 100/- purchased on or after 1.4.2012 shall be Rs. 238.87 after 10 years. Buy National Savings Certificates (NSCs) every month for five years – Re-invest on maturity and relax – On retirement it will fetch you monthly pension as the NSC matures.

Senior Citizen Saving Scheme (SCSS) Account

  • A new avenue of investment and return for Senior Citizen.
  • The account may be opened by an individual,who has attained age of 60 years or above on the date of opening of the account.
  • Who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement.
  • No age limit for the retired personnel of Defence services provided they fulfill other specified conditions.
  • The account may be opened in individual capacity or jointly with spouse.
  • Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.
  • The individual may open one or more account in the multiple of Rs. 1000/-, subject to a maximum limit of Rs. 15 lakh.
  • No withdrawal shall be permitted before the expiry of a period of five years from the date of opening of the account. The depositor may extend the account for a further period of 3 years.
  • Premature closure of account is permitted.
  • After one year but before 2 years on deduction of 1 ½ % of the deposit.
  • After 2 years but before date of maturity on deduction of 1% of the deposit.
  • Premature closure allowed after three years.
  • In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.
  • Interest @ 9.30% per annum from the date of deposit on quarterly basis. Interest can be automatically credited to savings account provided both the accounts stand in the same post office.
  • Interest rounded off to the nearest multiple of rupee one.
  • Post Maturity Interest at the rate applicable to the deposits under Post Office Savings Accounts from time to time is admissible for the period beyond maturity.
  • Nomination facility is available in the Scheme.
  • The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.
  • Monthly Income Scheme (MIS) and Senior Citizen Saving Scheme (SCSS) are the best for Senior Citizens who desire monthly/quarterly interest. Invest in MIS / SCSS and transfer interest into RD account through SB account through written request and earn a combined interest of 10.5% (approx.). This is the safest investment option for the Senior Citizens.