Post Office RD Interest Rates 2025
Post office Recurring Deposits have become the most preferred instruments when compared to banks. One of the reasons behind its popularity is the attractive interest rate one can earn on them and a great profit upon maturity. The post office RD interest rates are revised at a proper interval and the current interest rate is 6.70% p.a. The interest is compounded quarterly which enables the money deposited to multiply till the maturity time.
India Post offers good returns on opening a recurring deposit account with them. Under its Post Office savings scheme, it allows individuals to open the a 5-year post office recurring deposit account.
Interest Rate | 6.70% p.a. (Compounded quarterly) |
Tenure | 5 Years |
Minimum Deposit | Rs.100 per month |
Maximum Deposit | No Upper Limit (any amount in multiples of Rs.10) |
Missed Deposit Penalty | Re.1 for every Rs.100 |
*Note: The interest rate mentioned above is valid as of 31 March 2025.
The interest rates are revised periodically, with a Post Office RD currently earning an interest of 6.70% quarterly. The interest rates are revised periodically, with a Post Office RD currently earning an interest of 6.70% quarterly . The interest is compounded every quarter, which ensures that a sum of money multiplies by the time it matures.
*Note: The interest rate mentioned above is valid as of 1 January 2024.
The interest rate is subject to change and individuals should check the same before opting for an RD.
Also, Check - Fixed Deposit Rates
Post Office Recurring Deposit Tenure
A Recurring Deposit is an instrument which is used as a medium-term investment option. Most investors opt for it in order to meet foreseeable emergencies in the coming years. Currently, individuals who wish to open a Post Office RD need to ensure that their deposits are active for a minimum period of 5 years, i.e.
Minimum Tenure of Post Office RD = 5 years
Individuals who wish to continue with their RD even after this period can do so, for there is a provision which permits an RD to be extended by 5 more years, taking the maximum tenure to 10 years. RDs which have been extended beyond 5 years will continue to earn the interest, which is compounded every quarter, as previously.
Quantum of Deposits:
A Recurring Deposit provides individuals with an opportunity to save for the future by using the resources available to them. Unlike other deposits, the minimum deposit amount is kept low, ensuring that millions of rural and lower-middle class Indians can afford it. The table below highlights the quantum of deposits permitted in an RD.
Minimum Deposit | Rs.100 per month or any amount in multiples of Rs.10 |
Maximum Deposit | No upper limit |
Deposit Dates:
An individual opening a Post Office RD is expected to make a total of 60 deposits during the period, i.e., one deposit every month for 5 years. The first deposit should be made when the account is opened, with subsequent monthly deposits to be made before a particular date, depending on the date on which the account was opened.
Individuals who open an account between the 1st and 15th of a particular month are expected to make monthly deposits before the 15th of the next month.
Accounts which were opened after the 15th of a month will require subsequent deposits to be made between the 16th and the last day of a particular month. Deposits can be made either by means of cash or a cheque.
Delayed RD Deposits - Fine and Penalties
There could be instances where an account holder is unable to deposit the monthly amount in his/her RD. As per applicable rules, a maximum of 4 such defaults are permitted, post which the account will become a discontinued account. Such discontinued accounts can be revived within a period of 2 months from the fourth default.
The rules also state that a default penalty of Rs.1 for every Rs.100 shall be charged. This fine needs to be paid in addition to the missed deposit amount in order for the account to be revived.
Post Office Recurring Deposit Rebate
In order to incentivize people into depositing money in advance, a Post Office RD provides rebates on advance deposits. These rebates might not sound a lot but can help an individual with meagre resources save a considerable amount for other purposes. The table below highlights the rebate options provided with a Post Office RD.
Post Office RD Rebates Explained
Number of Advance Deposits Instalments | Quantum of Rebate |
6 | Rs.10 for every Rs.100 |
12 | Rs.40 for every Rs.100 |
Note: That these advance deposits should be made in a particular month
Let us continue with the example of Mr. John to see how this rebate system works. John gets an annual bonus for Diwali and decides to use it for advance deposits into his RD account. He chooses to pay for 10 months, paying Rs.1,000 for the same.
Now, as per the rebate system, he is entitled to get a rebate of 1 rupee for every Rs.10 deposited. In this case, since he deposits Rs.1,000, he gets a rebate of Rs.100, which he can use for some other purpose.
Post Office RD Loan Facility
You can borrow up to 50% of the balance credit in the account after depositing 12 instalments and keeping the account open for one year. You can repay the loan amount in full or in equal monthly instalments. Loan interest shall be calculated as 2% RD interest rate that applies to the RD account.
The interest will be calculated from the withdrawal date to the repayment date. If you fail to repay the loan amount by the maturity date, the loan amount plus interest will be deducted from your RD account's maturity value.
RD Guides & Article
- Recurring Deposit Vs. Chit Fund
- Miss to Pay the Recurring Deposit Due
- Difference Between Recurring Deposit and SIP
- Open RD Account through HDFC NetBanking
- RD Account in SBI
- Advantages of Recurring Deposit
- Flexi RD
- SBI Flexi RD Schemes
- Monthly Recurring Deposit
- City Union Bank Recurring Deposit
- Indian Bank Recurring Deposit
- Union Bank Recurring Deposit
- UCO Bank Recurring Deposit
FAQs on Post Office RD Interest Rates
- What is the minimum deposit amount in a post office RD?
The minimum deposit amount in a post office RD is Rs.100.
- What if I do not make my post office RD instalment on time?
If you fail to make the RD instalment by the stipulated day for a month, a default will be imposed for each failed month. A default penalty of Rs.1 for every Rs.100 shall be charged.
- Can I avail a loan on my post office RD?
Yes, you can borrow up to 50% of the balance credit in the account after depositing 12 instalments and keeping the account open for one year.
- Can I extend my post office RD?
Yes, you can extend your post office RD for another 5 years by submitting an application to the concerned post office.
- How is RD interest calculated?
Interest is compounded on a quarterly basis when it comes to recurring deposits.
- Which is the better option when it comes to opening an RD, in a bank or post office?
It is best to open an RD account where you can avail high interest rates.
- Are Post office RDs tax free?
Yes, post office RDs are tax free.
- Can minors open a post office RD account?
Yes, minors are eligible to open a post office RD account.
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