Post Office Recurring Deposit: Features, Rates & Eligibility

Investments are the cornerstones of financial security. Not only do they increase prosperity, but they also play a crucial role in building a stable future. Post offices, besides offering mail services, also offer several schemes that help you secure your financial future. One such scheme is the Post Office Recurring Deposit.A popular alternative to the conventional fixed deposit, the post office recurring deposit is known for its reliability, competitive interest rates, and returns. Additionally, with rates being revised at adequate intervals and compounded quarterly, this scheme enables the deposit to multiply significantly upon maturity. Let us learn more about the scheme, features, current rate of interest, and documents required for the post office recurring deposit scheme. Also read: What are the Types of Deposit Accounts?

The post office recurring deposit account has a tenure fixed for five years. From January 1, 2024, the interest on a post office RD account is 6.7% per annum, compounded quarterly. The account requires a monthly deposit or ₹100, or an amount in multiples of ₹10. There is no upper or maximum limit. Given below are the features of the post office RD scheme.• Tenure of the scheme is 5 years. However, if you want to continue after the completion of your tenure, you can extend it for another 5 years.• Minimum monthly payment is ₹100 or higher but in multiples of ₹10. If you open your account up to the 15thof a calendar month, you can make subsequent deposits up to the 15th. However, if you open your account between the 16thand the last day (working) of a month, you need to make deposits up to the last working day every month.• There is no maximum limit for deposits.• The rate of interest as on January 1, 2024 is 6.7%.• Interest is compounded quarterly.• The scheme offers nomination facilities.• You can make deposits by cash or cheque. The date of clearance of your cheque will be the date of deposit.• Accounts can be opened by a single adult or joint owners (up to 3 adults.)• Premature closure is permitted only after 3 years.• You can transfer your account from one post office to another.• In case of a missed payment, the fine is ₹1 for ₹100 denomination account for every month the payment is not made. The amount is proportionate for respective denominations. In case of 4 defaults, your account will discontinue. However, the account can be reinstated within two months after the last missed payment.• After you have continued the account for 1 year (12 instalments), you can avail a loan of up to 50% of your balance credit.

As on January 1, 2024, the interest rate applicable on post office recurring deposit accounts is 6.7% per annum. This rate is compounded quarterly.

Given below are the eligibility criteria to open a post office recurring deposit account:• You must be an Indian citizen, above the age of 18 years. You can open an account individually or jointly (the limit is 3 adults.)• Parents or guardians can open an account for minors or persons of unsound mind.• Minors above the age of 10 years can open an account.

You need the following documents to open a post office recurring deposit account:• An account-opening form• Two passport-sized photographs• Address and identity proof (Aadhaar, passport, PAN card etc.)You can open an account offline or online. To open an RD account offline, follow the given steps:• Collect the Post Office Recurring Deposit (PORD) form from your post office. You can also download the form.• Submit the form and required documents at the post office along with a minimum deposit of ₹100 and open your account.To open the account online, you must have an existing post office savings account along with being registered for Indian Post Office internet banking.• Visit the Indian Post e-Banking website.• Login using your registered ID.• Navigate to ‘General Services’, click on ‘Service Request.’• Follow the instructions to initiate a request for opening of account. Also read: How to Open a Savings Account - Online and Offline?

You can close your RD account prematurely only 3 years after the date you opened your account. You will need to submit the application form at your post office. If you close the account before it matures, the interest rate will still be applicable. If you have made any advance deposits, you will not be permitted to close the account until the number of months for which you have made payments.

Once you have deposited 12 instalments and your account has been active for 1 year, you can avail the loan facility. You can choose an amount up to 50% of the balance credit. You can either repay the loan in one lump-sum or as instalments.A 2% interest rate in addition to the existing RD interest rate will apply to the loan, with interest being calculated from the withdrawal date. If you do not pay the loan till account maturity, the loan amount and interest will be deducted from the maturity value.

You can make an advance deposit for up to 5 years in a functional RD account. If you have made an advance deposit of at least 6 months, you will receive a rebate of ₹10 for the denomination of ₹100. In case of a 12-month advance deposit, the rebate is ₹40. You can make an advance deposit at any time including when you open your account.

In this case, the nominee or claimant can give the claim to the relevant post office to receive the eligible balance of the account. After the claim is authorised, the nominee can also continue the account till maturity by applying for the same.

The Post Office RD account has a tenure of 5 years, which means it matures 5 years (or 60 months) after the date it was opened. Once the account has matured, you have the option to extend the account for another 5 years with the same interest rate as when you opened your account. You can do so by applying for an extension at your post office.You have the option to close your extended account any time during the extension period. In this case, the RD interest rate will be applicable for the years you have completed. However, if the period is less than one year, the post office savings account interest rates will apply to the period. Alternatively, you also have the option of retaining your account for up to 5 years without deposit.

The Post Office Recurring Deposit is an effective investment tool with affordable instalments. And the competitive interest rate given by the post office only enhances its appeal. Additionally, since the scheme is offered by India Post, you can be assured of its reliability.A secure investment opportunity, the post office recurring deposit is the perfect fit for you if you are opposed to risks. Not only is this option safe, it is also convenient. You have options to select your nearest post office, change branches if required, and avail loans during emergencies. The post office recurring deposit is, therefore, a low-risk and trustworthy way to grow your savings and get closer to achieving your financial goals. Also read: Government Investment Schemes for The Low-Risk Investor