Savings and Insurance: Saving Definition and Post Office Savings Bank

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Human life needs habit of saving in order to meet future requirements. Then only we can move on in our life without any struggle. If we spend everything, we have today there will be nothing left for tomorrow. At the same time saving is also a very important economic activity.

Saving Definition

Saving is the amount of income which is carried forward to future after meeting the current expenditure on goods and services and other things. This means that saving is the surplus of income over consumption.


Where to Keep Savings?

  • Saving of money is important in our life but where to keep those savings. If we keep surplus money with us that will be idle and that will not earn anything. At the same time that will not be available for any economic activity. Also, there is a scope for theft of money. On the other hand, we can give our savings to borrowers, but we are not sure about their credit worthiness. So, we need to keep our savings in a safe place. That could be a trusted, recognized financial institution like Banks, post offices etc. Individual may contribute less but India is a populous country, that results huge amount of savings.

  • There are many benefits associated with the habit of savings.

Importance of Saving

  • Savings Provide security – We don’t know what kind of problem or difficulty we are going to face in future. We may not be able to arrange money in order to meet those requirements suddenly. Savings will provide security in such situation.

  • Savings increases the future income of the person.

  • Saving provide Lending and Borrowing: Surplus savings can be given to required people and it will earn some extra money in the form of interest.

  • Development of the Economy: Savings can be diverted to the production infrastructure development activities. That will improve the production value of the country. It results economic growth.

  • Standard of living will be improved.

  • There will be more availability of sources (funds) for agricultural activities and other developmental activities.

Image of agricultural activities

Image of Agricultural Activities

Post Office Savings Bank

  • Post office is a government-operated postal system in India. Along with delivering mails, remitting money by money orders post offices also accept deposits. Post offices are providing many schemes under savings. Some of them are -

  • Post office Savings Account: The post office pays an interest rate of per annum on deposits in its savings account which can be held individually or in joint name. A person can open a savings account with a minimum deposit of Rs In case of a non-cheque facility account, the customer is required to maintain a minimum balance of Rs

  • Post office Time Deposit Account (Fixed deposit a/c): The post office offers the time deposit or fixed deposit account in four options of maturity periods: 1 year, 2 years, 3 years and 5 years. For year, the interest rate is , for 2 years it is 7.0%, for 3 years the interest rate is and for years it is With just Rs you can open a fixed deposit with the post office. No maximum limit.

  • Senior citizen savings scheme: The post office pays an interest rate of on deposits in the senior citizen savings account. The post office permits only one deposit in this account of an amount in multiples Rs The maximum limit should not exceed Rs lakh.

  • Kisan Vikas Patra (KVP): The post office pays an interest rate of on deposits in Kisan Vikas Patra (KVP). The KVP scheme requires a minimum investment of Rs and it should be in multiples of Rs . There is no maximum limit if you want to invest in the KVP. The amount deposited in the Kisan Vikas Patra doubles in a period of months.

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