The Post Office Recurring Deposit (RD) is a small savings scheme that helps you save a fixed amount every month. It is backed by the Government of India, which makes it a safe option. Here is how it works.
Key features
- **Minimum deposit:** Rs 100 a month, and in multiples of Rs 10 after that
- **No maximum limit**
- **Tenure:** 5 years, which can be extended for another 5 years
- **Interest:** compounded quarterly, at a rate set by the Ministry of Finance every quarter
The rate is fixed for the full five years at the time you open the account. Check the current rate on the India Post website before opening.
Who can open
- Any adult resident Indian
- Up to three adults jointly
- A guardian on behalf of a minor or a person of unsound mind
- A minor above 10 years in their own name
There is no limit on the number of RD accounts a person can open.
How to open
- Visit a post office with your Aadhaar, PAN, photograph and the first deposit.
- Fill in the account opening form.
- If you have an India Post Payments Bank account or post office savings account with internet banking, you may be able to open an RD online.
The monthly deposit must be made by the 15th of the month if the account was opened between the 1st and 15th, and by the last working day if opened after the 15th.
Also Read: PPF Account Rules: Deposit Limit, 15 Year Lock In, Loan, Partial Withdrawal and Extension Explained | Senior Citizens Savings Scheme: Rs 30 Lakh Limit, Quarterly Interest, Tax Rules and How to Open
Missed deposits
If you miss a monthly deposit, a small default fee is charged for each month of delay. After four consecutive defaults, the account is discontinued, but it can be revived within two months by paying all dues.
Loan facility
After 12 instalments have been made and the account has run for one year, you can take a loan of up to 50 percent of the balance. Interest on the loan is 2 percent above the RD rate.
Premature closure
You can close the RD after three years from opening. In that case, interest is paid at the Post Office Savings Account rate, which is lower than the RD rate.
Advance deposit
You can deposit several months in advance and may get a small rebate.
Tax
RD interest is taxable as per your income slab. It is not eligible for deduction under Section 80C.
Who it suits
The RD suits people with regular income who want a disciplined, low risk saving habit, such as for a child’s education or a family function.
Bottom line
The Post Office RD is a simple, safe way to save from Rs 100 a month. Check the current interest rate and make deposits on time.
Source / स्रोत: India Post, National Savings Institute, Ministry of Finance
