Post Office Recurring Deposit
The Indian government on 12 December 2019 launched the Post Office Recurring Deposit. It is also known as National Saving Recurring Deposit Scheme.
The National Savings Recurring Deposit Scheme's primary goal is to give small investors the ability to make regular small investments to help them meet their future requirements. You can open an account with as little as Rs.100 under this scheme.
Apart from normal or traditional saving schemes such as fixed deposits and other long-term or short-term schemes, customers choose the Post Office Recurring Deposit among the numerous savings plans available.
Post Office RD Interest Rates 2025
Regular Monthly Deposit | Rs.100 (Minimum) |
Tenure | Five years |
Interest rate | 6.7% p.a. |
Total savings | Depends on the investment amount |
Total interest earned | Depends on the investment amount |
India Post Office Recurring Deposit
The recurring deposit scheme offered by India Post Office is a very popular deposit scheme among Indians. With its extensive network of more than 1.5 lakh post offices, India Post offers nine federal government-backed savings plans.
All of these schemes' interest rates are evaluated and changed on a quarterly basis based on the yield on 10-year government bonds.
Rules of India Post Office Recurring Deposit
The various rules of India post office recurring deposit that one should know before investing in the scheme are mentioned below
1, Opening rules for recurring deposit account - According to the India Post website, a minimum deposit of Rs.10 per month is required to start an RD account at a post office. Additionally, monthly deposits can be multiplied by Rs.5.
If the RD account is opened between the 16th and last working day of the month, money can be deposited up until the last working day of the following month. If the RD account is opened between the 15th and 15th of a calendar month, money can be deposited up to the 15th day of the following month.
A person is permitted to have a joint account with another person and many RD accounts at the Post Office in his or her name.
2. Rules for premature withdrawal - The Post Office RD account permits one early withdrawal of up to 50% of the balance after a year from the account's starting date. Additionally, it must be paid back in full, together with any relevant interest.
3. Maturity proceeds - The depositor in the RD account shall be entitled to receive the deposited amount as a lump sum payment along with the interest component as prescribed from time to time when a term of five years has passed since the account opening date.
4. Charges for late payment - A state of default is considered to have occurred if the RD account holder misses an installment payment for a given month. And in this situation, a cost of 5 paise for every Rs.5 is charged.
Therefore, in the event of a particular month's default, the depositor must first pay the defaulted monthly amount and the default fee before being able to deposit the installment for the current month.
A maximum of four defaults are permitted before the account is closed, it should be mentioned. You do have a two-month grace period, though, in which you can restore or resuscitate the account.
What is a Post Office RD Scheme?
The post office offers nine saving schemes including the Post Office Savings Scheme that are backed by the Government of India. The recurring deposit offered by the Post Office is offered as a mid-term saving scheme. With this scheme the depositors will be depositing their investments for five years at minimum.
Recurring deposits are believed to be risk-free as they do not depend on the market. Recurring deposits are great for investors who prefer low risk investments, as well as, first time investors depositing their money in a scheme for the first time.
The recurring deposit scheme calls for a set amount to be deposited into the account at regular periods, with interest accrued and compounded quarterly.
Important details to know about the Post Office Recurring Deposit Scheme
Some of the important facts you must know about the Post Office Recurring Deposit Scheme are given below:
- The Post Office RD account requires a minimum monthly deposit of Rs.100.
- The interest is calculated at an annual rate of 6.7%, compounded quarterly, starting from 1 October 2023. The account reaches maturity after 5 years, equivalent to 60 monthly deposits, counting from the date of opening.
Steps to open a Recurring Deposit Account with the Post Office of India
Given below are the steps to open a recurring deposit account with the Post Office of India online:
- Click on the link https://ebanking.indiapost.gov.in/corp/AuthenticationController?FORMSGROUP_ID__=AuthenticationFG&__START_TRAN_FLAG__=Y&__FG_BUTTONS__=LOAD&ACTION.LOAD=Y&AuthenticationFG.LOGIN_FLAG=1&BANK_ID=DOP.
- Use your official login information, such as your user ID and password, to log in.
- Locate the 'General Service' option on the main menu, then choose 'Service Request' from the submenu.
- Select ‘New Requests’ from the ‘Service Request’ box.
- Select ‘RD Accounts - Open an RD Account’ from the menu.
- You will be taken to a new page where you must enter the required data.
- Click ‘Submit’ once you've finished the form, then carefully read the information on the next page.
- To complete your RD application, enter the required 'Transaction Password'.
- The details of your RD account, including the maturity date and the amount of your periodic deposits, will be displayed on the screen.
- It's a good idea to print a copy of this information for your records.
You can also open an RD account with the Post Office India by following the steps given below:
- Find the closest post office.
- Get the RD application form and correctly fill it out.
- Use the attached pay-in-slip form to submit the completed RD form together with the initial deposit.
- Cash or checks are also acceptable forms of payment for the initial deposit.
Steps to close your Post Office Recurring Deposit Account in a Premature Manner
Given below are the steps to prematurely close your Post Office Recurring Deposit Account:
- After operating for a minimum of three years from the date of opening, an RD account may be closed early. You must submit the designated application form at the designated post office to start this process.
- You must understand that in the case of early closure, the interest rate that applies will be that of a PO Savings Account.
- It's also crucial to remember that the RD account cannot be prematurely closed before the time period for which the advance deposits were made has passed.
How to make payments for Post Office Recurring Deposit via Mobile Banking?
With the use of the India Post Payments Bank (IPPB) app, you may easily deposit money into your post office RD accounts using mobile banking. Once you have successfully registered for a Digital Savings Account, this service is made available to you.
Along with numerous other banking features and services, the IPPB app gives you the option to make your monthly RD contributions online.
Types of Post Office RD Accounts
Under the National Savings Recurring Deposit Scheme, you can open an account individually as well as in joint names. Legal guardians can open an account in their minor child's name. You can submit an application in the format of Form-1 to the account’s office to open the following accounts:
- Individual account
- Minor account managed by the legal guardian
- Minor account in their own names for a minor who is at least 10 years old
- Joint account (up to three individuals)
Eligibility Criteria for the Post Office Recurring Deposit (RD)
The primary eligibility criteria to open an RD account in a Post Office would be the following
- Applicant must be an Indian national and over 18 years old.
- Minors who are above the age of 10 years.
- Parents/guardians of a minor to open an account on behalf of the latter.
For the minors, the RD account will be held jointly by the guardians or parents and for the applicants above 18 years old, the account will be under the name of the primary applicant.
Features of the Post Office Recurring Deposit
The RD offered by the Post Office offers a wide range of benefits and features.
- Limited Restrictions - To open an RD account, investors can deposit as low as Rs.100 per month and does not have any upper limit. The applicants can deposit their money while opening their RD account in a post office through cash or cheque.
- Operations - A Post Office RD can be operated in a joint manner if the RD has been opened under the name of a minor. Two individuals can operate the account. If a person who is above the age of 18 years opens the account, the account can be operated by the primary applicant singly or jointly as well.
- Interest - This RD scheme offers a fixed rate of interest and is competitive in the market. The interest accrued is compounded quarterly and helps investors generate earnings on a frequent basis.
- Nomination - The scheme allows applicants to choose a nominee to receive the pay out in case of death. Investors can choose the facility of nomination during the opening of the account in the post office. They can also do so after the account is opened as well.
- Transfer of funds - account holders can transfer funds from their RD to their savings account easily and they can open any number of accounts in the several post offices in the country.
- Facility of Rebate - Individuals can also opt for the rebate facility on the deposits given in advance but the facility is limited to six instalments only.
- Withdrawal - The Post Office RD allows applicants to withdraw their funds after three years from the date of account opening. This can be done by submitting the required application form to the relevant post office.
- Loan - If the account is active for a full year with 12 instalments deposited, the account holder is eligible for a loan up to 50% of the account's credit balance. The loan may be paid back in full at one time or in equal monthly payments. The loan interest rate will be calculated as follows: 2% + the RD interest rate that applies to the RD account.
Rate of Interest on Post Office Recurring Deposit (RD)
An interest rate of 6.7% p.a. is offered on the Post Office Recurring Deposit which makes it among the top investment options for people.
The compound interest is calculated each quarter and is one of the top advantages of the scheme. Individuals can have a strong corpus at their disposal during the time of maturity and would assist in financial stability and creation of wealth as well for the long run.
Also, Check - Post Office RD Interest Rates
How to Calculate Interest on the Post Office RD Account?
The interest on the Post Office Recurring Deposit is offered based on the compounding principle. The formula for compound interest mentioned below is used to calculate the interest:
A= P x (1+R/N) ^ (Nt)
A = Maturing Amount
P = Recurring Amount
N= Number of times the interest has been compounded
T= Tenure
R= Rate of interest
Rebate Facility on Post Office Recurring Deposit
A rebate is a discount which is offered to the account holders of the Post Office RD Scheme to promote premature or advance deposits to their account.
For example, if a person is depositing Rs.1,000 for a total tenure of 7 months as an advance in his Post Office RD account, under this rebate system, the person will be entitled to get a rebate of Re.1 for every Rs.10 which has been deposited in advance. Hence, for the total sum of Rs.1,000, he will get a rebate of Rs.100.
For the Post Office RD Scheme, account holders can avail the rebate system on their deposits which were invested at least 6 months in advance. The rebate will be only made available on a deposit which is equal to the total value of 6 instalments.
In the case of delay in deposits, the account holder will be liable to pay the penalties as specified by the bank. The RD account holders will be allowed a maximum of 4 defaults on their payments, after which their account will be discontinued.
As a penalty, 5 paise on every Rs.5 will be accrued and the penalty along with the missed payments must be deposited into their RD account. The Post Office RD allows account holders to revive their account by making their payments with 2 months after the 5th default.
Bank RD vs Post Office RD
Recurring Deposit (RD) is a brilliant investment tool if you are looking to maximize your savings without having to take too many risks. Various banks in India offer their customers the option to open an RD account and deposit a certain amount on a monthly basis to earn interest on it. If you do not wish to open an RD account with a bank in India, you can do so with the Post Office in India. However, there are certain differences in the benefits offered by banks in India when compared to the ones offered by Post Office if you are looking to open an RD account.
We will have a look at the difference between opening an RD account with a bank rd and post office rd in india.
- The interest rates offered by lenders in India may vary. The rate of interest offered may go up to 7% p.a. However, if you open an RD account with Post Office, then you will earn an interest of 6.7% p.a.
- You can choose your tenure for investing in an RD account for up to ten years if you open one with a bank. However, in case of Post Office, the maximum investment tenure on offer is up to five years.
- Once your tenure is over, you can renew your RD account to continue investing. If you have opened an RD account with the bank and wish to renew, then you can choose your tenure as per your needs. However, in case of Post Office, if you wish to renew, then the tenure will have to be five years.
- You can prematurely withdraw your investment amount. While for Post Office you can withdraw only 50% of the deposit amount, for banks, you can withdraw up to 95% of the amount.
- Nomination facility is available for both banks and post office.
- The rate of interest is calculated on a quarterly basis for both banks and post office.
- TDS at the rate of 10% will be deducted if the RD amount is more than Rs.10,000 in a year regardless of whether you have an RD account with the bank or post office. You will have to submit Form 15G or Form 15H to avoid TDS.
Premature Withdrawal of Post Office RD Account
The facility of premature withdrawal of the RD account is allowed for the account holders in case of an emergency or for urgent expenses. However, premature withdrawal is allowed after 1 year from the date of opening of the account and 50% of the funds can be withdrawn. With this, an interest of 1% will be applied on the amount withdrawn.
A Post Office Recurring Deposit is a viable option for the people who are new to investing and wish to accumulate wealth over a period of time, without indulging in market risks. Moreover, since the Post Office RD is backed by the government, the funds deposited, will generate wealth at a steady rate of interest and will not be subjected to the trends of the market.
FAQs on Post Office Recurring Deposit (RD)
- What is the consequence of missing an installment payment deadline?
In the event that there are more than four defaults, the account will be suspended. By paying a default cost, it can be restored within two months.
- What does RD mean in the post office?
Post office recurring deposit is one of the most well-known financial services. With the Post Office Recurring Deposit (PORD) 5-year plan, you can make 60 regular monthly deposits over the course of five years. These deposits receive interest at the current rate, compounded every three months.
- What is the Senior Savings Program offered by India Post Office?
Under section 80C, the Senior Citizen Savings Scheme of 2004 (SCSS) is deductible. A senior citizen of India may open a SCSS account. Within one month of retirement, a person who chose to participate in a voluntary retirement program or who retired between the ages of 55 and 60 may invest in a SCSS account. If they retire at age 50 or later, members of the armed forces may choose to participate in this program. Above the age of 60, any other person may choose to participate in this program. Your savings can be safely parked in a SCSS account, where they will earn interest and qualify for tax breaks.
- How much can I invest in a Post Office recurring deposit?
For opening a recurring deposit account with the Post Office, the minimum amount is Rs.100 per amount or any amount in multiples of Rs.10. There is no cap on the maximum amount that you can invest.
- Which post office plan is the best?
The 5 year time deposit, public provident fund, sukanya samriddhi yojana, national savings certificate, and senior citizen savings scheme (SCSS) are post office programs that qualify for a deduction under section 80C. SCSS offers the highest interest rate of them all at 8.0%. However, SCSS investments are solely open to senior citizens. Sukanya Samriddhi Yojana thus offers the greatest rate of interest for people who are not senior folks. Therefore, Sukanya Samriddhi Yojana and Senior Citizens Savings Scheme are the greatest post office programs for different demographics.
- Can an RD account be opened in the name of a minor at the post office?
Yes, an RD account in the name of a minor can be opened. The minor should be above 10 years of age.
- Can you take a loan against a Postal Life Insurance policy, and how many?
Postal Life Insurance provides a loan facility to its customers under certain conditions. The depositor can avail of this facility after depositing at least 12 instalments and continuing the account for one year without any discontinuation. The loan amount is limited to 50% of the balance credit in the account. The loan can be repaid either in one lump sum or in equal monthly instalments.
The interest on the loan is applicable at the rate of 2% plus the RD interest rate applicable to the RD account. The interest will be calculated from the withdrawal date to the repayment date. In case the loan is not repaid till maturity, the loan amount, along with interest, will be deducted from the maturity value of the RD account. The customers can apply for a loan by submitting the loan application form and passbook at the concerned Post Office.
- Who can open a Postal Life Insurance policy, and how many?
Postal Life Insurance offers various options for opening an account. A single adult can open an account with us, as can up to three adults in a joint account under Joint A or Joint B. Guardians can also open accounts on behalf of minors or persons of unsound mind.
Additionally, minors above the age of 10 can open their accounts in their name. It's worth noting that there are no restrictions on the number of accounts that can be opened.
- Is the facility for premature withdrawal available on Post Office recurring deposits?
The facility of premature withdrawal is available. However, premature withdrawal is allowed after 3 years from the date of opening the account
- Does the post office offer any kind of rebate on recurring deposits?
If you make an advance deposit of at least six instalments, inclusive of the month of deposit, for a Rs. 100 denominations, you will receive a rebate of Rs. 10 for six months or Rs. 40 for 12 months.
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