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,
- Risk averse investors
- Who do not have a lump sum amount to invest
- Willing to get guaranteed returns
- Wish to invest systematically to build long term wealth
- 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
| Benefit | Details |
|---|---|
| Capital Protection | Post Office Recurring Deposit has government backing which makes it risk-free investment and its return is safe and fixed. |
| Lower Investment Requirement | The account can be opened with an amount as low as Rs.100 and then in multiple of Rs.10. |
| Corpus Building | Post Office Recurring Deposit helps you build handsome corpus by investing small sum of money every month. With the accumulated money in your RD account, you can fulfill your major financial goals. |
| Higher Interest Rate | Post Office Recurring Deposit is one of the highest-earning schemes with an interest rate of 6.70% p.a. The interest is compounded quarterly. |
| Minor Account | Even a minor above 10 years of age can open this account. |
| Transferrable | PO RD account is transferable from one post office to any other post office across India for absolutely free. |
| Loan Availability | Loan of up to 50% against the deposit available in the account after completing 12 instalments without defaulting. |
Eligibility Criteria: Who Can Open Post Office Recurring Deposit Account?
- Applicant should be resident Indian individual
- Minor account can also be opened by their parents or guardians
- 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.
| Details | Amount |
|---|---|
| Minimum Deposit | Rs.100 |
| Subsequent Deposit | in multiple of Rs.10 |
| Maximum Deposit | No limit |
| Deposit Frequency | Monthly |
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.
| Interest Rate | 6.70% per annum |
| Interest Compounding | Quarterly |
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
| Duration | Interest Rate |
|---|---|
| 1 April 1987 to 31 March 1991 | 11 |
| 1 April 1991 to 30 Sep 1991 | 11.5 |
| 1 Oct 1991 to 15 Dec 1991 | 13.5 |
| 16 Dec 1991 to 1 Sep1993 | 13.5 |
| 2 Sep 1993 to 31 Dec 1998 | 12.5 |
| 1 Jan 1999 to 14 Jan 2000 | 11.5 |
| 15 Jan 2000 to 28 Feb 2001 | 10.5 |
| 1 March 2001 to 28 Feb 2002 | 9 |
| 1 March 2002 to 28 Feb 2003 | 8.5 |
| 1 March 2003 to 30 Nov 2011 | 7.5 |
| 1 Dec 2011 to 31 March 2012 | 8 |
| 1 April 2012 to 31 March 2013 | 8.4 |
| 1 April 2013 to 31 March 2014 | 8.3 |
| 1 April 2014 to 31 March 2016 | 8.4 |
| 1 April 2016 to 30 Sep 2016 | 7.4 |
| 1 Oct 2016 to 31 Mar 2017 | 7.3 |
| 1 Apr 2017 to 30 Jun 2017 | 7.2 |
| 1 Jul 2017 to 31 Dec 2017 | 7.1 |
| 1 Jan 2018 to 30 Sep 2018 | 6.9 |
| 1 Oct 2018 to 30 Jun 2019 | 7.3 |
| 1 Jul 2019 to 31 Mar 2020 | 7.2 |
| 1 Apr 2020 to 31 Mar 2023 | 5.8 |
| 1 Apr 2020 to 30 Jun 2023 | 6.2 |
| 1 Jul 2023 to 30 Sep 2023 | 6.5 |
| 1 Oct 2023 to 30 June 2024 | 6.7 |
| 1 July 2024 to 30 Sep 2024 | 6.7 |
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.