Post Office Recurring Deposit Scheme

Post office offers a 5-year Recurring deposit scheme to the people which allows them to save their money systematically on a monthly basis for the period of 5 years or 60 monthly instalments. Post Office Recurring Deposit is a recommended investment alternative for conservative investors who cannot afford to deposit a large amount at once.

Post Office Recurring Deposit is the best option for,

1. Risk averse investors
2. Who do not have a lump sum amount to invest
3. Willing to get guaranteed returns
4. Wish to invest systematically to build long term wealth
5. Who want no TDS to be made

Features of Post Office Recurring Deposit

• Monthly investment for fixed period of 5 years
• Recurring Deposit can be made through cash, Demand Draft, Pay Order or Cheque
• RD account is transferable from one post office to any other post office across India
• Multiple account can be opened by any investor
• Post office RD interest rates are reviewed every quarter
• No TDS will be made
• Premature closure is allowed after 3 years
• Interest income will be taxable as per person's income tax slab
• Post Office RD account offers a nomination facility
• Sole or joint (up to three adults) operation is allowed
• Investment in Post Office RDs is not eligible for tax savings under Section 80C of the Income Tax Act, 1961

Benefits of Post Office Recurring Deposit

Eligibility Criteria: Who Can Open Post Office Recurring Deposit Account?

1. Applicant should be resident Indian individual
2. Minor account can also be opened by their parents or guardians
3. Joint account can be opened by adults

Drawbacks of Post Office RD

• In a Post Office, the RD tenure is fixed and is of five years only while in case of banks, RD tenure is available in the range of six months to 10 years which can be renewed indefinitely
• Partial withdrawal is not allowed before 1 year from opening the RD account
• Post office RD scheme does not offer an additional interest rate benefit for senior citizens

Investment Amount of Post Office RD

The minimum instalment to start a post office RD account is Rs.100 and thereafter, in multiples of Rs 10. There is no maximum limit on investment amount.

Default fee of Re.1 for every Rs.100 denomination (or a proportionate amount for other denominations) is charged for each month of delay on missing any RD installment. The RD account becomes discontinued after 4 continuous defaults. However, it can be revived in 2 months but if the same is not revived within 2 months, no further deposit is allowed and the account can only be closed at maturity with interest.

Rebate on Advance Deposit of RD Installments

Rebate is available on advance payment of at least 6 or more RD instalments. For a 6-month advance deposit with a denomination of Rs. 100 having 6 installments (including the month of deposit), the person will receive a rebate of Rs. 10. He will receive a rebate of Rs. 40 if he makes an advance deposit in the same denomination for 12 months.

Timing of Deposits of Post Office RD

Timing of deposit of installments in PO RD depends upon when the RD account has been opened. The details of the timing of deposit of subsequent installments are mentioned below,

(1) If the RD account is opened before 15th of a calendar month: The subsequent deposit can be made up to 15th day of next month

(2) If the RD account is opened after 15th of a calendar month: The subsequent deposits can be made up to last working day of next month

Interest Rate on Post Office RD

Presently, the interest rate of 6.70% per annum compounded quarterly is being offered under Post Office Recurring Deposit effective from 1st January 2024 to 31st March 2024.

Post Office RD interest rate is reviewed every quarter by the Government of India. The interest is compounded quarterly but paid at the time of maturity.

Historical Interest Rates of Post Office Recurring Deposit

How to Open Post Office RD Account?

Stepwise process to open a Post Office RD Account are outlined below.

• Step 1: Obtain an account opening form for PO MIS from your nearest Post Office. Alternatively, you can download PO RD Account Opening Application Form.
• Step 2: Fill in all the required details in the form completely and put your sign wherever required.
• Step 3: Submit the form along with the self-attested copies of all the required documents at the post office.
• Step 4: Make the initial investment.

How to Open Post Office RD Account Online through Internet Banking?

• Step 1: Visit https://ebanking.indiapost.gov.in
• Step 2: Login to your internet banking account using your user ID and password
• Step 3: Click on 'General Service' tab from the menu
• Step 4: Click on 'Service request' tab
• Step 5: Click on 'New Requests' tab
• Step 6: Click on 'RD Accounts- Open an RD Account' from available options
• Step 7: New page will open
• Step 8: Input all the details required
• Step 9: Click on 'Submit'
• Step 10: Verify the details once again in the next page
• Step 11: Key in your 'Transaction password'.
• Step 12: You will find the details of your RD account along with the maturity date and amount to be deposited every month.

Partial Withdrawal of Post Office RD

It is necessary to keep the post office RD account active for a minimum period of one year in order to withdraw the deposit amount from the Recurring Deposit account. Only one withdrawal is permitted before the RD maturity period as per the rules. Partial Withdrawal is allowed for up to 50% of the balance in the RD account after 1 year from the account opening date.

Any money that the customer withdraws must be repaid either in one lump sum or in equal payments. This withdrawal will be treated as a loan whose interest will be calculated at a rate of 2% over the interest rate of RD (Recurring Deposit) account.

It is necessary to repay both the amount withdrawn and the interest on it before the maturity of the RD account. If the loan is not repaid till RD's maturity, the loan and its interest will be deducted from the maturity amount of the RD account.

Documents Required for Post Office RD

• Post Office Recurring Deposit Account Opening Form
• Now it has become mandatory to provide an Aadhar number or PAN number to open an RD account in the post office as per the recent notification from the Ministry of Finance.

Renewal of Post Office RD

After the maturity period of 5 years, the Post Office RD can be renewed for another 5 years.

Premature Closure of Post Office RD

Account holder can close RD account prematurely after 3 years from the account opening date. For closing the RD prematurely, he needs to submit an application form called "Application For Pre-mature Closure of RD Account" to the post office where he maintains his RD account.

If the RD account is closed prematurely i.e. before its actual maturity, the account holder will receive the interest rate of PO Savings Account only.

Further, if the account holder has made any advance deposits in his RD account, he will not be able to close the RD account until the duration for which the advance deposits have been made by him.

How to Close Post Office RD Account Prematurely?

You can close RD account prematurely after 3 years from the account opening date. You can make this request online. For closing the RD prematurely, you need to follow below-mentioned procedure.

• Step 1: Visit ebanking.indiapost.gov.in.
• Step 2: Enter your User ID and password.
• Step 3: Click on 'Login'.
• Step 4: An OTP will be sent on your registered mobile number.
• Step 5: Enter the OTP that you have received on your registered mobile number in the given space.
• Step 6: Click on 'Confirm' button.
• Step 7: Dashboard will open.
• Step 8: Click on 'General Services'.
• Step 9: Click on 'Services Requests'.
• Step 10: Select 'New Requests'.
• Step 11: Click on the 'Closure/ Pre closure of RD Accounts'.
• Step 12: Select the type of deposit like Post Office RD or Post Office TD.
• Step 13: Click on 'Go' button.
• Step 14: Select your deposit account number.
• Step 15: Select your credit account.
• Step 16: Click on 'Submit Online' button.
• Step 17: You will be redirected to a new page where you will have to enter the transaction password.
• Step 18: Click on 'Submit' button.
• Step 19: Your request to close the RD premaurely will be processed.
• Step 20: You will receive a reference number against the request that you have made.
• Step 21: The amount will be credited to your savings account after 24 hours of submitting the request.

Charges for Premature Closure of Post Office RD Account

The maturity of post office RD is 5 years (60 monthly deposits) from the date of opening. However, the RD Account can be closed prematurely after 3 years from the date of account opening by submitting prescribed application form at concerned Post Office. If RD account is closed prematurely even one day before maturity, only PO Savings Account interest rate will be paid.