The post office savings account is a deposit scheme provided by the post office departments throughout India, which provides a fixed interest rate. It is a beneficial scheme for individual investors who wish to earn a fixed rate of interest by investing a significant portion of their financial assets.
Post office savings account is also a very helpful scheme for those residing in rural parts of India. Since the nationwide reach of post offices is much greater compared to banks, a large number of undeserved people have been able to get access to savings accounts through post offices.
The central government decides the interest rates on the post office savings account. Mostly it is same as that of the banks which is around 4% and it is calculated every month. According to the income tax regulations, if a post office savings account holder generates returns lower than Rs. 10,000 a year through interest, then it is tax-fre
The original Post Office Savings Bank was limited to deposits of £30 per year with a maximum balance of £150. Interest was paid at the rate of 2.5 percent per annum on whole pounds in the account. Later, the limits were raised to a maximum of £500 per year in deposits with no limit on the total amount. Within five years of the system’s establishment, there were over 600,000 accounts and £8.2 million on deposit.
The money deposited in a post office savings account can be withdrawn any time when the depositor needs. Only thing is a minimum balance of Rs. 50 should be maintained in case of a generic account and Rs. 500 in case of cheque facility.