Keep at least Rs 119 in your post office savings account to avoid closure

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Opening a savings account with the post office has become mandatory if you want to investment in small saving instruments. But do you know that if you want to maintain an account with the post office, your balance should never fall below Rs 119 since it would be closed by the authorities and in that case you have to go through the trouble of opening another account all over again.

The new rule came into effect from December 2020.

India Post recently notified that throughout the year one has to maintain a minimum balance of Rs 500 in the respective savings account. Otherwise, a fine of Rs 118, including GST, would be charged. As a result, if you have less than Rs 118 in your account, it is automatically closed and you would have to open a new savings account.

There is no way to revive a closed account. But if the minimum balance falls below Rs 500, Rs 118 would be debited as fine and the account is rendered dormant. A dormant account can be revived by submitting an application and KYC documents all over again.

“A huge number of senior citizens use post office savings accounts for their pension, salary and/or other payments/transactions. But this minimum balance and account closure norms make it cumbersome for them,” said Nirmal Das, General Secretary of West Bengal small savings agents association.

“If any customer doesn’t keep at least Rs 500 for 20 or 21 days consecutively starting from the 10th of every month, then he/she will not be entitled to get the interest for the respective month,” added Das, pointing out it makes it complex for the elderly.

One needs a savings account in post office for every transaction. Even if an instrument like an NSC matures, the proceeds flow into the savings account from where the investor can withdraw it.