Post Office Recurring Deposit Scheme offers safe monthly savings with guaranteed returns. Check interest rate, eligibility, benefits.
Saving money regularly is one of the most effective ways to build long-term financial security. For individuals looking for a safe, government-backed, and disciplined savings option, the Post Office Recurring Deposit Scheme stands out as one of the best choices in India. Designed to encourage small but regular savings, this scheme is especially popular among salaried individuals, students, homemakers, and retired government employee.
What is the Post Office Recurring Deposit Scheme?
The Post Office Recurring Deposit Scheme, also known as Post Office RD, is a small savings scheme operated by the Government of India through the Department of Posts. It allows investors to deposit a fixed amount every month for a predetermined tenure and earn interest at a rate declared by the government.
This scheme promotes habitual savings by enabling individuals to invest small amounts regularly instead of making a lump-sum investment. The maturity amount consists of the total deposits made over the period along with the interest earned.
Key Features of the Post Office Recurring Deposit Scheme
The Post Office RD Scheme comes with several attractive features that make it suitable for a wide range of investors.
- Government-Backed Security: One of the biggest advantages of the Post Office RD Scheme is that it is fully backed by the Government of India, making it one of the safest investment options available.
- Fixed Tenure: The standard tenure of the Post Office RD Scheme is 5 years (60 months).
- Affordable Monthly Deposits: It is accessible for small savers also as the minimum deposit is Rs. 100.
- Nomination Facility: Nomination can be made at the time of opening the account or later, ensuring smooth transfer of funds in case of the account holder’s demise.
- Loan Facility: Account holders can avail a loan of up to 50% of the balance after one year, providing liquidity during emergencies.
Interest Rate on Post Office Recurring Deposit
The interest rate on the Post Office RD Scheme is not market-linked and is revised periodically by the Government of India. Once an account is opened, the interest rate applicable at that time remains unchanged throughout the tenure. Interest rate is Compounded quarterly and Calculated based on monthly deposits.
Eligibility Criteria
The Post Office RD Scheme has simple eligibility conditions.
Who Can Open an Account?
- Any resident Indian individual
- A single adult
- Minors above 10 years can open an account in their own name
- A guardian can open an account on behalf of a minor
- Joint accounts can be opened by up to three adults
Who Cannot Open?
- Non-Resident Indians (NRIs)
- Hindu Undivided Families (HUFs)
- Trusts and institutions
How to Open a Post Office RD Account
Opening a Post Office RD account is a simple process.
Step-by-Step Process
- Visit the nearest post office
- Fill out the RD account opening form
- Submit required documents
- Deposit the first monthly installment
Required Documents
- Identity proof (Aadhaar Card, PAN Card, Passport, etc.)
- Address proof
- Passport-size photographs
You can open the account offline at any post office. Many post offices also allow linking with online banking services for ease of transactions.
Deposit Rules and Penalty for Delay
Monthly Deposit Rules
- An account holder shall make sixty monthly deposits in an account.
- The minimum amount of monthly deposit in an account shall be one hundred rupees or any sum in multiples of ten rupees.
- The first monthly deposit shall be made at the time of opening of the account.
- If there are not more than four defaults in monthly deposits, the account holder has two options, either extend the maturity period of the account by as many months as the number of defaults or deposit the defaulted instalments during the extended period.
- If there are more than four defaults, the account shall be treated as discontinued and revival of the account shall be permitted only within a period of two months from the month of fourth default.
- Revival fee at the rate of one rupee for every hundred rupees of a defaulted instalment for each month of default (proportionate amount for other denominations) shall also be paid along with such deposit in lumpsum.
Loan and Withdrawal Facility
Loan Against RD Account
- Available after 12 months of account opening.
- Depositor may avail loan facility up to 50% of the deposits made in the account.
- Loan can be repaid in one lump-sum or in equal monthly instalments.
- Interest on loan is slightly higher than the RD interest rate.
Premature Closure
- Account can be closed prematurely after 3 years from the date of account opening.
- If the account is closed prematurely even one day before maturity. Post Office savings account interest rate will be applicable
Limitations of Post Office Recurring Deposit Scheme
While the scheme has many advantages, it also has certain limitations.
- No tax deduction under Section 80C
- Returns may be lower than equity-linked instruments
- Fixed tenure with limited flexibility
- Not available to NRIs
Therefore, it is best suited for conservative investors rather than those seeking high returns.
Maturity Amount Calculation
Maturity amount shown in table is approximate and may vary slightly based on the prevailing interest rate.
| Monthly Deposit (₹) | Total Investment (₹) | Approx. Maturity Amount (₹) | Approx. Interest Earned (₹) |
| 500 | 30,000 | 35,500 – 36,000 | 5,500 – 6,000 |
| 1,000 | 60,000 | 71,000 – 72,000 | 11,000 – 12,000 |
| 1,500 | 90,000 | 1,06,500 – 1,08,000 | 16,500 – 18,000 |
| 2,000 | 1,20,000 | 1,42,000 – 1,44,000 | 22,000 – 24,000 |
| 3,000 | 1,80,000 | 2,13,000 – 2,16,000 | 33,000 – 36,000 |
| 5,000 | 3,00,000 | 3,55,000 – 3,60,000 | 55,000 – 60,000 |
| 10,000 | 6,00,000 | 7,10,000 – 7,20,000 | 1,10,000 – 1,20,000 |
Conclusion
The Post Office Recurring Deposit Scheme is a reliable and time-tested savings option for individuals who want to build wealth gradually without taking risks. With its government backing, assured returns, low minimum investment, and disciplined saving structure, it remains a preferred choice among conservative investors.
Frequently Asked Questions (FAQs)
Q1. Is nomination facility available in Post Office RD Scheme?
Yes, nomination facility is available and can be added at the time of opening the account or later during the tenure.
Q2. Is interest earned on Post Office RD taxable?
Yes, the interest earned on the Post Office RD Scheme is fully taxable according to the investor’s income tax slab. However, no TDS is deducted by the post office.
Q3. Is premature withdrawal allowed in Post Office RD?
Yes, premature closure of a Post Office RD account is allowed after three years, subject to applicable rules and interest adjustments.
Q4. Can I open multiple Post Office RD accounts?
Yes, an individual can open multiple RD accounts in the post office, subject to applicable rules.
I have read so many articles or reviews concerning the blogger lovers except this piece of writing is
genuinely a nice piece of writing, keep it up.