Personal Finance

Post office increases minimum balance limit of savings account. Details here

Updated : January 27, 2020 02:28 PM IST

The Post Office Directorate has asked all post offices across the country to contact the saving account holders and instruct them about the new rules.

The Department of Posts has increased the minimum balance limit from Rs 50 to Rs 500 for its savings account customers. According to the new rule, if the account holder fails to maintain the minimum balance limit, a maintenance fee of Rs 100 will be deducted from the account on the last working day of each financial year.

Here are key things to know about post office saving scheme’s new rule:

The Post Office Directorate has asked all post offices across the country to contact the saving account holders and instruct them to maintain Rs 500 minimum balance in their accounts. Customer failing to do so will be levied a penalty of Rs 100, it said.

After deduction of the account maintenance fee, if the balance in the account becomes zero, the account will stand automatically closed, India Post said in the notification.

According to the directorate, the post offices are losing around Rs 2,800 crore per annum due to the earlier Rs 50 minimum balance limit in the savings account.

Currently, India Post pays interest at the rate of 4 percent per annum on deposit in its savings account. At least one transaction of deposit or withdrawal in three financial years is necessary to keep the account active.

The interest earned on deposit is tax-free up to Rs 10,000 per year in case of a regular savings account, according to India Post.