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Post Office recurring deposit: Features and rates

[ecis2016.org] Indian Post not only offers impressive interest on opening a recurring deposit account but also allows individuals to open the same for a span of 5 years.

A recurring deposit is an investment tool for people looking to invest for a short amount of time. This investment tool helps you save money for emergencies that may occur in the foreseeable future. Indian Post not only offers impressive interest on opening a recurring deposit account but also allows individuals to open the same for a span of 5 years. 

Post office RD: Key features

Rate of interest in post office RD (same as the post office RD interest rate 2021) 5.8% p.a. (Computed Quarterly)
Tenure  5 Years
Minimum Deposit Rs 100 per month
Maximum Deposit No upper limit
Missed Deposit Penalty Re 1 for every Rs 100 

The interest rates for the policy are revised regularly. The current interest rates are 5.8% p.a. The interest gets compounded each quarter. Thus a sum of money will surely increase by the time it matures.

Tenure of Post Office RD

The minimum tenure is 5 years as of now. Individuals who wish to extend their RD can do so for a period of 5 more years, making the total 10 years. 

Quantum of deposits of Post Office RD

A recurring deposit is a great tool for medium-term investments and does not require much money to start. This makes it suitable for even the poorest of families and rural households. 

The minimum Deposit under the same is Rs 100, and there is no upper limit to it. 

Deposit dates of Post Office RD

Every individual is expected to make about 60 deposits during the term. The first deposit is made with the opening of the account, and the subsequent deposits are to be made before a fixed date, depending on the date of opening the account. 

If you open an account before the 15th of the month and after the 1st of the month, you will be required to make the payments before every 15th of the subsequent month. If you open the account after that, you will have to make a deposit before the last date of the month.

Fines and penalties of Post Office RD

A maximum of 4 faults is permitted in terms of making the payments to your RD, after which the account will be discontinued. Such accounts can be revived within 2 months by making the needful payments, but not after that. A penalty of Re 1 is charged for every Rs 100, in addition to the amount that is due to the bank.

Rebates offered on Post Office RD

In order to encourage timely payments, post offices offer a rebate on advance payments. These rebates help people with a meagre amount of money to afford these services and make the services more accessible to them. 

The rebates offered are as follows: 

Number of Advanced Instalments Rebate
6 Rs 10 for every Rs 100 
12 Rs 40 for every Rs 100 

Important Information on Post Office RD

  • The interest payable on Post Office RDs is 5.8% p.a.
  • The interest is compounded on a quarterly basis even for extended RDs.
  • Open an RD wherever you avail higher interest rates, whether it is a bank or a post office. This helps ensure that you get maximum benefits.
  • RDs are much better than FDs for medium-term investment.
  • Post office RDs are tax-free.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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