[ecis2016.org] For more than 150 years, the Department of Posts has been connecting Indian citizens and the Central government by offering services like delivering packages, life insurance services, and receiving funds through Post Office Saving Schemes.
Savings are an important aspect of one’s life and is the income that has not been spent. Your savings assist you in accumulating capital, leading to stress-free financial health. You can save money in different ways like in a piggy bank, creating a bank deposit account or participating in a post office savings scheme.
For more than 150 years, the Department of Posts has been connecting Indian citizens and the Central government, impacting the lives of Indian residents by offering services like delivering packages, life insurance services, and receiving funds through Post Office Saving Schemes.
Let us look at one of the most popular schemes.
5-Year Post Office Recurring Deposit (PORD) account
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The Post office’s recurring deposit scheme is a mid-term savings plan. Account-holders will be required to keep their money in this programme for a minimum of five years.
As they are not market-dependent, recurring deposits are thought to be very reliable in terms of returns. Recurring deposits are ideal for individuals who want low-risk investments and for first-time investors.
The recurring deposit system requires a certain sum to be transferred into the account on a regular basis, with interest accruing and compounding quarterly. In this case, the sum should be a minimum of Rs 100 monthly or any amount in the multiples of Rs 10, with an interest rate of 5.8% per annum.
Eligibility requirements for post office recurring deposit
The following are the primary eligibility requirements for opening an recurring deposit account at a Post Office:
- The applicant should be an Indian citizen at least 18 years old.
- Minors over the age of ten.
- A minor’s legal guardians may set up an account on their behalf.
The RD account for minors will be carried out jointly by the guardians or parents and the account for individuals over 18 will be kept in the name of the applicant itself.
How to open the post office recurring deposit account through mobile?
- Download the India Post Mobile Banking app from Google Playstore.
- Log in to your account.
- Now, select the Requests button on the home screen.
- Enter your details to open the post office recurring deposit account.
Post office recurring deposit benefits
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The Post Office’s RD offers a multitude of benefits and services, which are :
- Limited restrictions: To start an RD account, users can contribute as little as Rs.10 monthly, with no maximum. Applicants can deposit funds in a post office by cash or cheque while starting their RD account.
- Operations: The RD can be run jointly if it was opened in the capacity of a minor. The account can be operated by two people. If a person over the age of 18 registers for the account, the account will be administered solely or jointly by the principal applicant.
- Interest rate: This rate of interest in the post office RD scheme has a fixed and fair rate in the market. The interest earned is compounded quarterly, allowing investors to produce returns on a regular basis.
- Nomination: The system allows applicants to name a nominee who will receive the compensation in the event of their death. Investors can select the nomination option while setting up an account at the postal service.
- Funds transfer: RD account holders can quickly transfer finances from their RD to a savings account. They can open unlimited accounts at any of the country’s post offices.
- Facility of rebate: Users can also choose to receive a reimbursement on their advance deposits; however, the facility is restricted to six instalments.
- Withdrawal: The Post Office RD permits users to easily withdraw funds from their accounts. Account-holders may retrieve up to 50% of the overall of their deposit balance once a year since the account is opened. With this, an interest of 1% will be applied to the amount withdrawn.
Post office RD vs bank RD
If you want to optimise your savings without taking a significant risk, a recurring deposit is an excellent investment option. Several banks in India allow their clients to open an RD account and deposit a fixed amount on a recurring basis in order to receive interest.
If you do not want to register an RD account with an Indian bank, then you can do so with the Indian Post Office. However, there are some differences between the incentives provided by banks in India and those supplied by the Post Office if you want to register an RD account.
- Banks in India may offer different interest rates. The interest rate charged could rise to 7% p.a. Alternatively, if you open a Post Office RD account, you will earn 5.8 % p.a. in return.
- If you open an RD account at the bank, you can deposit for up to 10 years. In the case of the Post Office, however, the total investment duration available is up to five years.
- When your term is up, you can reactivate your RD account to keep investing. If you have an RD account in the bank and want to renew it, you could choose the duration based on your requirements. However, if you want to renew your Post Office account, the tenure must be 5 years.
- You have the option to withdraw your invested money early. While the Post Office only allows you to take 50% of your deposit, banks allow you to retrieve up to 95% of your account.
- All banks and post offices offer nomination services.
- The interest rate is determined quarterly, both for banks and post offices.
- TDS of 10% will be levied if the RD sum exceeds Rs.10,000 in a calendar year, irrespective of whether you hold an RD account at the bank or a post office. To avoid TDS, you must file Form 15G or Form 15H.
Online payment for post office recurring deposit
Indian Post nowadays has launched the India Post Payments Bank (IPPB), which will allow you to pay monthly Recurring Deposit account deposits online. After visiting the post office once to register the Recurring Deposit account, the user can handle his Recurring Deposit account via the IPPB app on their smartphone. The steps for depositing monthly instalments in the post office RD account via IPPB are as follows
- Deposit money from your bank to the IPPB account.
- Select Recurring Deposit from the DOP Products menu.
- Put in your Recurring Deposit user id, followed by your DOP customer ID.
- Select the payment amount and term.
- IPPB will notify you of the successful transaction of your regular instalment in your Recurring Deposit account via the IPPB mobile application.
How much money can I put into a Post Office recurring deposit?
The minimum amount for starting a recurring deposit account with the Post Office is Rs.100 per amount or any sum in multiples of Rs.10. There is no limit to the amount you can invest.
Is it possible to withdraw money from Post Office recurring deposits early?
The option of early withdrawal is accessible. Premature withdrawals are permitted after one year from the date the account was opened.
Can a post office RD account be formed in the name of a minor?
Yes, an RD account in a minor’s name can be opened. The minor must be over the age of ten.
Is there a post office rebate plan for recurrent deposits?
If you make a 6-month advance deposit, the post office will give you a rebate. The rebate would be paid in denominations of Rs 100.
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