For investors who are taking their initial steps towards personal finance, opening a savings account can benefit in a variety of ways, from interest rates to security and liquidity. The first two things that spring to mind when opening a savings account are deposit security and interest rates. Individuals can ameliorate this by looking into Post Office Savings Accounts (POSB) and India Post Payments Bank (IPPB) savings accounts. Because these two deposit options are regulated by the Department of Post, which is part of the Ministry of Communications of the Government of India, the risk of deposit safety is purely zero. Following IPPB’s announcement of a 25 basis point interest rate drop on savings account variants yesterday, let us compare the perks and interest rates of both IPPB and POSB for a better understanding before opening one.
IPPB Savings Account
IPPB provides three types of savings accounts: Regular Savings Account, Digital Savings Account, and Basic Savings Account, for a good alternative. Regular savings accounts at IPPB can be established with no initial deposit amount and no requirement for the customer to maintain a monthly average balance. This account can be connected to a POSA (Post Office Savings Account), which would sweep any day-end balances over Rs. 2 lakh into 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, anyone over the age of 18 with an Aadhaar and PAN card can open a digital savings account with zero balance online through the IPPB Mobile App. Customers will receive benefits such as a free RuPay Virtual Debit Card, no monthly average balance requirement, free monthly e-statement, and a maximum yearly cumulative deposit limit of Rs. 1,20,000 by opening an account. Customers who open a Digital Savings Account with IPPB must complete the KYC requirements within 12 months to keep the account operational.
Customers who open a Basic Savings Account receive the same benefits as those who open a Regular Savings Account, but they can only make four cash withdrawals per month. There is no requirement to maintain a monthly average amount, and the account can be started with no balance. This account can be linked to a POSA (Post Office Savings Account), and any sum over Rs. 2 lakh at the end of the day can be transferred into the linked POSA (Post Office Savings Account). IPPB has deducted 25 basis points on interest rates for all of the above-mentioned savings account variations. IPPB will provide the following interest rates on savings bank deposits commencing June 1, 2022.
Post Office Savings Accounts (POSB)
This deposit option is part of the Department of Posts’ Post Office Savings Schemes. 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, which has no maximum restriction. The minimum withdrawal amount is Rs. 50. Post office savings accounts are now giving a 4.0 per cent annual interest rate, which is determined on the basis of a minimum amount between the 10th and the end of the month. According to the guidelines of India Post, interest shall be credited to the account at the end of each fiscal year at the interest rate specified by the Ministry of Finance, 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.