Banks Vs Post Office: Interest Rates On Savings Account Compared

Opening a savings account is the first step toward your personal finance when it comes to short-term savings with adequate liquidity. Savings accounts are a safe location to park your surplus savings and offer a simple way to withdraw them, making them a must-have tool for meeting the liquidity requirements of your deposit. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India, provides a coverage of Rs 5 lakh per depositor on his or her saving account. These accounts also pay secure interest rates on a quarterly basis which can be an ideal way to meet your short-term goals or emergencies. Interest rates on savings accounts differ from bank to bank, therefore we'll compare the rates of the top five public, private, and small finance banks offered on post office savings accounts.

Top 5 Public Sector Banks Offering Highest Interest Rates On Savings Account

Here are the top 5 public sector banks that are now giving the highest interest rates on savings accounts, according to our research.

Banks	Interest Rates Per Annum	W.e.f.
UCO Bank	3.50% to 4.00%	25.08.2017
Punjab & Sind Bank	3.00% to 3.20%	01st February 2022
Canara Bank	2.90% to 3.20%	28.09.2020
Punjab National Bank	2.75% to 3.25%	3rd February 2022
Bank of Baroda	2.75% to 3.20%	19/07/2021
Source: Bank Websites

Top 5 Private Sector Banks Offering Highest Interest Rates On Savings Account

According to our analysis, here are the top 5 private sector banks that are currently offering the highest interest rates on savings accounts.

Banks	Interest Rates Per Annum	W.e.f.
RBL Bank	4.25% to 6.25%	February 03, 2022
IDFC First Bank	4.00% to 5.00%	01/05/2021
IndusInd Bank	4.00% to 5.00%	July 23rd, 2021
Kotak Mahindra Bank	3.50%	Sep 20, 2021
Bandhan Bank	3.00% to 6.00%	November 1, 2021
Source: Bank Websites

Top 5 Small Finance Banks Offering Highest Interest Rates On Savings Account

According to our analysis, here are the top 5 small finance banks that are now offering the highest savings account interest rates.

Banks	Interest Rates Per Annum	W.e.f.
Ujjivan Small Finance Bank	4.00% to 7.00%	6th March 2021
ESAF Small Finance Bank	4.00% to 6.50%	01st August 2020
North East Small Finance Bank	4.00% to 6.00%	27th Jan 2022
Suryoday Small Finance Bank	4.00% to 6.25%	January 20, 2022
Utkarsh Small Finance Bank	3.75% to 7.00%	October 1, 2021
Source: Bank Websites

Post Office Savings Account

The Post Office Savings Account (POSA) is offered by the Department of Posts and requires a minimum deposit of Rs 500 to establish. By individually, jointly, or on behalf of a minor, an account can be established. Currently, POSA provides a 4% annual interest rate, which is computed on the basis of a minimum balance. Interest generated on all savings bank accounts up to Rs. 10,000 in a financial year is exempted from taxable income under section 80TTA of the Income Tax Act.

If no deposits or withdrawals are made in an account for three years in a row, the account is considered silent/dormant. The account allows a minimum withdrawal of Rs 50, after which no withdrawals would be authorized, lowering the minimum balance to Rs 500. If the account balance does not exceed Rs. 500 before the end of the financial year, a fee of Rs. 100 will be deducted as an account maintenance fee, and if the account balance falls to zero, the account will be closed permanently.