Post Office Savings Bank Scheme & its Salient Features.
In this article I will be listing out some of the important post office Savings Scheme and its features.
RD (Recurring Deposit Account)
- RD account may be opened for a period of 5 years.
- Amount should be in multiples of Rs.5
- Minimum denomination may be Rs 10/
- The amount of deposit made at the time of opening cannot be varied during currency of account.
- A depositor can have more than one account for his own or jointly.
- Deposit should made regularly once in every calendar month.
Deposits can be done by any one of the following mode :
- cash
- check or demand draft(Account should open after realization of check)
- Pay order
- By automatic transfer
Accounts may be the following type
- Single
- Joint A-to be opened by 2 adults and payable to both jointly or to a survivor.
- Joint B-to be opened by 2 adults and payable to either of the depositor or survivor.
- Guardian in the name of minor or minor who as attained the age of 10.
- Guardian of a person of the unsound mind.
- If depositor failed to pay monthly installments, subsequent month’s payment will be accepted as long as the number of defaults should not exceed four.
- Revival can be done within a period of 2 months from the month of fifth default after payment of necessary defaults. For Eg. Depositor has not paid installments from Jan to April then he should revival his account within 2 months i.e within the month of June. If the defaults exceeds to 6 months, then account will be treated as discontinued account.
- RD withdrawal can be given once to a non discontinued account and account has been in operation for at least one year.
- 50% amount of the deposit will be given during RD withdrawal and amount should be in multiples of that respective account denomination.
- The closure of a RD account can be done on or after 5 years from the date of first deposit and not earlier if he paid advance installments.
- After the completion of 5 years from the first deposit, the Depositor can extend his RD account to the period maximum up to 5 years after maturity.
- Premature closure can be allowed after 3 years from the date of opening of the account.
TD (Time Deposit Account)
TD account has 4 types.
- 1year TD
- 2year TD
- 3year TD
- 5year TD
- Amount should be in multiples of 200/-
- Maximum no limit.
- Any number of accounts can be opened by single depositor in one post office or in many post offices.
Accounts may be the following type
- Single
- Joint A-to be opened by 2 adults and payable to both jointly or to a survivor.
- Joint B-to be opened by 2 adults and payable to either of the depositor or survivor.
- Guardian in the name of minor or minor who as attained the age of 10.
- Guardian of a person of the unsound mind.
Deposits can be done by any one of the following mode :
- cash
- check or demand draft(Account should open after realization of check)
- Reinvestment can be done after the maturity.
- Premature closure can be allowed after expiry of 6 months from the date of opening of an account.
- Interest for premature closure will be given as follows
- If account closed after expiry of 6 months but before one year, such closure has SB rate of interest.
- If account closed after one year, in case of 2year,3year and 5year TD then interest will be
| Time |
Interest |
|---|
| After 1 year before 2 years |
1year TD int-1 (7.5%-1)=6.5% |
| After 2 years before 3 years |
TDint-1 (7.5%-1)=6.5% |
| After 3 years |
3 year TDint-1 (8%-1)=7% |
| After 4 years |
3 year TDint-1 (8%-1)=7% |
Further for completed months in this case, will be SB rate of interest.
Short method to get interest on calculator for only TD accounts.
Interest/400+1===Principle amount
Eg. (7.5/400+1===10000) is equals to 10771.35
Now subtract this amount from the principle amount
10771.35-10000=771.35 this is the interest for 1year TD.
PPF (Public Provident Fund Account)
- Maturity period of PPF Account is for 15 years.
- Any individual can open an account on his own or on behalf of minors.
- Account can be opened in any branch of SBI or in Head Post offices or in Sub Post offices or any branch of nationalized banks.
- Only ONE account can be opened in one name either in Post office or in Banks.
- Joint account cannot be opened.
Deposits can be done by any one of the following mode :
- Cash
- Check or demand draft (Account should open after realization of check)
- Minimum amount for opening an account is 500/ in multiples of 5/ and maximum is 1, 50,000/ in a financial year.
- Investor can deposit in lump sum or in installments but installment should not exceed 150000 in a financial year.
- The account can be transferred to one post office to other post office or to any nationalized banks vice versa.
- After the completion of 15 years from the first deposit, the Depositor can extend within one year of maturity for further block of 5 years without loss of benefits.
- Premature closure is not allowed before 15 years.
- Depositor can take one time loan from the accumulated amount after expiry of 4th financial year from the date of deposit.
Eg. If an account is opened on 15.6.2017 then he can take loan on or after 2022-2023 financial years.
- Subscriber can make one withdrawal every year after the expiry of 7th financial year.
- A subscriber may nominate one or more person and no nomination to be made in respect of an account opened on behalf of minors.
- During the death of a subscriber, amount can be repaid to his nominee or legal heir even before the expiry of 15 years. The nominee/heir cannot continue the account in his name.
- Tax deductable.
MIS (Monthly Income Scheme)
- Amount should be in multiples of 1500/.
- Minimum amount per account is-1500/ and Max is-4.5 lakhs per investor.
- For joint account, maximum amount should be 9lakhs.
- An individual can invest max 4.5 lakhs including his share in joint account.
- Maturity period is for 5 years.
Accounts may be the following type
- Single
- Joint A - to be opened by 2 or 3 adults and payable to both jointly or to a survivor.
- Joint B - to be opened by 2 or 3 adults and payable to either of the depositor or survivor.
- Guardian in the name of minor or minor who as attained the age of 10 o a person of unsound mind.
Deposits can be done by any one of the following mode :
- Cash
- Check or demand draft(Account should open after realization of check)
- A single MIS account can be converted into joint account and vice versa.
- Nomination facility is available for single and joint accounts as well.
- Premature closure can be done after the expiry of one year from the date of deposit.
- An account closed before expiry of 3 years from the date of deposit, 2% will be deducted from the principle amount, similarly if it is closed after the expiry of 3 years, 1% amount will be deducted.
- The interest will be payable monthly to the depositor on completion of a month from the date of deposit.
- In case of death of depositor before maturity, account may be closed and deposit refunded along with interest up to the month preceding the month in which refund is made. The nominee/heir cannot continue the account in his name.
- In case of joint account, if one of the investor has dies then account will be treated as single account in the name of survivor.
- SB rate of interest will be given up to 2 years after maturity of a MIS account.
- Account cannot be extended.
Senior Citizen Savings Scheme
- Account can be opened by a individual who has attained the age of 60years.
- Account can be opened by a individual who has attained the age of 55 years or more but less than 60 years and who has taken voluntary retirement from the service with the condition that, account should be opened within one month of date of receipt of retirement benefits.
- Provided further that the retired personnel of Defense Services (excluding Civilian Defense Employees) shall be eligible to subscribe under the scheme irrespective of the above age limits subject to the fulfillment of other specified conditions.
- Account may be opened individually or jointly (Joint A or Joint B) with spouse only.
- Minimum amount is Rs.1000/-and Maximum is 15 lkhs
- A individual can open more than one account with condition that, only one account permitted to open in a calendar month.
- Maturity of an account is for 5 years.
- Account can be extended further period of 3 years after the maturity by giving an application to post office within the period of one year after the maturity.
- Premature closure can be done after the completion of one year from the date of deposit.
- 1.5% will be deducted if it is closed before 2 years and 1% will be deducted if it is closed after 2 years.
- In case of death of the depositor before maturity, shall be closed and deposit will be refunded along with interest.
- Nominee cannot continue the account after death of a depositor, except in case of joint account, or spouse is a sole nominee, the spouse may continue the account on same conditions.
- Interest on this account can be payable quarterly i.e. 31st March, 30th June, 30th September, and 31st December.
Saving Bank Account
- Postal saving bank can be opened by any individuals for daily transactions like deposits or for withdrawals. It can be carried out at any times in any post office’s working hours.
- Minimum deposit is 50/ (without check book) and 500/-for check book saving account.
Accounts may be the following type
- Single
- Joint A-to be opened by 2 adults and payable to both jointly or to a survivor.
- Joint B-to be opened by 2 adults and payable to either of the depositor or survivor.
- Guardian in the name of minor or minor who as attained the age of 10.
- Guardian of a person of the unsound mind.
- Pension Account.
- Provident Fund, Superannuation Fund, Gratuity Fund account opened on behalf of individual members.
- Only one Pension account can be opened by pensioner. No other deposit can be made in his pension account.
- Nomination facility is available.
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