For investors who are taking their initial steps towards personal finance, opening a savings account can benefit in a number of ways, from interest rates to security and liquidity. The first two things that come to mind while opening a savings account are deposit safety and interest rates. Individuals can rectify this by looking at Post Office Savings Account (POSB) and India Post Payments Bank (IPPB) Savings Accounts. Since these two deposit options are regulated by the Department of Posts, which is part of the Ministry of Communications, Government of India, the risk of deposit security is completely zero. After IPPB yesterday announced a 25 basis points slash in interest rate on savings account types, let’s compare the perks and interest rates of both IPPB and POSB for a better understanding before opening one.
IPPB Savings Account
IPPB offers three types of savings accounts: Regular Savings Account, Digital Savings Account and Basic Savings Account for a good option. Regular savings accounts in IPPB can be set up without any initial deposit and there is no need for the customer to maintain a monthly average balance. This account can be linked to a POSA (Post Office Savings Account) with a balance of Rs. 2 lakh in the linked POSA (Post Office Savings Account). Customers can create a regular savings account at any of the bank’s access points or at their residence, and they can make unlimited cash deposits and withdrawals.
As the name suggests, any person above 18 years of age who has Aadhaar and PAN card can open a digital savings account with zero balance online through IPPB mobile app. Customers will get benefits like free RuPay virtual debit card, no monthly average balance requirement, free monthly e-statement, and maximum annual cumulative deposit limit of Rs. 1,20,000 by opening an account. Customers opening a digital savings account with IPPB will have to complete the KYC requirements within 12 months to keep the account operational.
Customers opening a basic savings account enjoy the same benefits as regular savings account openers, but they can make only four cash withdrawals per month. There is no need to maintain a monthly average amount, and the account can be started without any balance. This account can be linked to POSA (Post Office Savings Account), and any amount exceeding Rs. Rs 2 lakh can be transferred to the linked POSA (Post Office Savings Account) at the end of the day. IPPB has cut interest rates by 25 basis points for all the above-mentioned savings account variations. IPPB will offer the following interest rates on savings bank deposits with effect from June 1, 2022.
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Post Office Savings Accounts (POSB)
This deposit option is part of the Post Office Savings Schemes of the Department of Posts. A single adult, two adults, a guardian on behalf of a minor, a guardian on behalf of a person of unsound mind, or a minor above the age of ten years can all open a Post Office Savings Account (SB). A minimum deposit of INR 500/- is required to start an account, with no maximum restrictions. Minimum withdrawal amount is Rs. 50. Post Office Savings Accounts now offer an interest rate of 4.0 per cent per annum, which is determined based on the minimum amount due between the 10th and the end of the month. As per India Post guidelines, interest will be credited to the account at the rate of interest specified by the Ministry of Finance at the end of each financial year, and interest received on all savings bank accounts up to Rs. 10,000 is excluded from taxable income under section 80TTA of the Income Tax Act.
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