India Post Payments Bank account vs post office savings accounts: How are they different?

Prime Minister Narendra Modi launched the India Post Payments Bank (IPPB) on September 1, in a bid to push India’s rural population into the formal financial system. IPPB will have 650 branches and 3250 access points across the country.

It is important to note that post offices in India had already been offering savings account facility, offering a 4 percent interests on deposits in the Post Office Savings Account (POSA), payable quarterly. This is the same as IPPB accounts and both the accounts can be linked together. So, how are the two different?

IPPB vs POSA

- In a POSA, a minimum deposit of Rs 20 is required to open an account and Rs 500 is required to for an account with a cheque facility. However, IPPB allows zero balance savings accounts to be opened.

- Account holders have to maintain an account balance of at least Rs 50 per month or Rs 500, for accounts with cheque facility, in POSA. In IPPB, account holders do not need to maintain any minimum balance in their savings account.

- In POSA, there is no maximum balance limit for the account holders. IPPB, however, caps the basic savings amount to Rs 1 lakh in an account. Any amount which crosses that figure will be transferred to the linked POSA account.

- The IPPB has three types of savings account, which has different features. Those are Regular, Digital and Basic. POSA’s services have been uniform.

IPPB has come up with a new feature facilitating doorstep banking, which POSA did not offer. It, however, comes with additional charges.