India Post Payments Bank and Post Office Savings Bank – Some Confusions, Rumours and Facts

For the past few weeks, rumour mongers have been spreading some baseless media news regarding India Post Payments Bank (IPPB). Some of the free services offered by IPPB were beefed up and quoted against the charges levied by both public and private banks. There has also been a mix up between the services of Postal Savings Bank and India Post Payments Bank. We decided to give our readers more clarity on the same, so let’s hear some facts.

What is India Post Payments Bank?

Payments bank were introduced to popularise banking among the masses. It was licensed on August 19th, 2015 under the 1949 banking regulation act section 22. These new model banks can accept a restricted deposit, limited to Rs 1 Lakh. RBI can increase the limit based on the bank’s performance. For money transactions, you have the option to use debit cards or atm cards, net banking and mobile banking. But there were also restrictions like these banks should not involve in lending activities and must have 25 percent of its branches in rural areas.

India Post Payments Bank was the third such entity to receive the permit for Payments Bank after Airtel Payments bank and Paytm Payments bank. RBI has earlier given “in-principle” license to a total of 11 entities. Since IPPB being introduced through government operated India Post, it has got all the attention as expected.

You can open three distinct accounts with IPPB – Regular account – Safal, Basic Savings Bank Deposit Account (BSBDA) –  Sugam and BSBDA Small – Saral. For all account type, IPPB will be offering an interest rate of up to 5.5 percent on money deposit.

IPPB will offer basic banking services like payments including social security payments, utility bill payments, recharges etc. You can do person to person both domestic and cross-border money transfer. Other services include distribution of insurance, mutual funds, and pension products. It will also act as business correspondent to other banks for credit products.

What is Post Office Savings Account?

Post Office Savings Account (POSB) is a type of regular savings account. The POSB accounts are highly secure instruments to deposit funds which offer full or partial liquidation when the need arises. These accounts are ideal for senior citizens who want to earn a regular income without exposure to risk.

Due to the country-wide reach of post offices, the government introduced the concept of opening savings account through post offices. Post Office savings account can be opened by an adult, minor (minimum 10 years of age), a joint account by 2 or 3 adults, or a person of unsound mind. To open an account and for more details, you can visit the nearest post office.

Now let’s see some of the features and compare the charges levied by POSB and IPPB. The compilation is purely based on internet sources. So please check with the nearest India Post for correct charges.

POSB  account vs IPPB Savings account charges and features

In addition to the service charges mentioned in the above table for IPPB, you also need to pay additional service tax at the rate of 15 percent. In the present scenario for every extra transaction, you will be charged Rs 20 and an extra service charge of 15 percent. That’s in total the deducted amount will be Rs 23. Similarly, service charge for ATM cards after the first year will be Rs 115. The tariffs for inter-post fund transfer service via CBS in POSB is said to be reasonable.

So far we have seen that the widely circulated rumours about free services offered by India Post Payments Bank are limited. There is much confusion to the crowd between the two entities – Postal Savings bank and India Post Payments Bank. But still, there are several undisclosed service charges and limitations for these two entities. For more details regarding India Post payments bank read our previous article. This article isn’t exhaustive, so please excuse us for any errors. For more inquiries directly contact India Post Payments bank [link]. Peace!