Post Office RD Interest Rates

What is a Post Office Recurring Deposit? 

A Post Office Recurring Deposit (National Savings Recurring Deposit Account) is a government-backed savings scheme where investors deposit a fixed amount every month. The minimum deposit is INR 100, with further contributions in multiples of INR 10, and there is no maximum limit. The Post Office RD encourages disciplined monthly savings.

RD interest rates compound quarterly and determine the maturity value of your investments. Each instalment earns interest from the date of deposit until maturity, so earlier deposits generate relatively higher returns than later ones. When instalments are paid regularly, interest is compounded quarterly on the accumulated balance as per India Post rules. If the account becomes irregular or is closed early, the applicable savings account rules and interest provisions apply.

Post Office Recurring Deposit Interest Rates

The Post Office Recurring Deposit scheme currently provides a government-backed interest rate that is revised periodically.

Note: Post Office RD interest rates may change every quarter, so the applicable rate is the one in force at the time of account opening.

Key Features of Post Office RD

The Post Office National Savings Recurring Deposit Account (Post Office RD) offers clear features to encourage steady savings.

• Advance Deposit and Rebate: Investors can make advance deposits for up to 5 years. For an account of ₹100 denomination, advance deposits qualify for a rebate of ₹10 for six or more deposits in a month. For twelve deposits, ₹40 is given, with an additional ₹10 for any remaining deposits of at least six.
• Loan against RD: Depositors can avail a Post Office loan against RD of up to 50% of the balance after the account has been in operation for at least one year and twelve instalments. The loan is charged simple interest at 2% above the applicable Post Office RD interest rate.
• Default rules: If a monthly instalment is missed, a default fee of ₹1 per ₹100 deposit is charged. After four defaults, the account becomes discontinued but can be revived within two months.
• Premature closure: The Post Office RD account can be closed prematurely after 3 years from the date of opening. If the account is closed before maturity, the interest will be adjusted to the Post Office Savings Account (POSA) interest rate, even if it's closed one day before maturity. Moreover, Post Office RD premature withdrawal remains unavailable until the time for which advance deposits were previously made there.

How to Open a Post Office RD

A Post Office Recurring Deposit may be opened online or offline. The steps for both methods are clearly given below:

Online Method

This online method works best for investors who already hold an active Post Office Savings Account with internet or mobile banking enabled.

• Log in to Internet or Mobile Banking: Visit the official e-banking portal of India Post and sign in using your user ID and password.
• Navigate to the RD Section: Go to the deposits or savings area and choose the option to start a Recurring Deposit account.
• Enter Deposit Details: Fill in the monthly instalment amount, nominee details, and confirm the five-year tenure.
• Select the Linked Savings Account: Select your Post Office Savings Account where monthly instalments will be debited automatically from it.
• Review and Submit the Application: Carefully verify all the entered information and accept the terms and conditions before submission.
• Receive Account Confirmation: Once processed, the Post Office RD account becomes active, and the confirmation details are shown in your banking dashboard.

Offline Method

If you need assistance in person, you may open a Post Office RD by visiting the nearest post office branch. This involves completing an application form using basic supporting documents.

• Visit the Nearest Post Office: Go to your nearby post office branch and request the Recurring Deposit account opening form.
• Fill the Application Form: Submit personal details, monthly deposit amount, tenure confirmation, and nominee information.
• Submit KYC Documents: Submit valid ID proof, address proof, and photos following the latest KYC guidelines.
• Choose Mode of Deposit: Pick how you will make monthly instalments, whether by cash, cheque, or standing instruction from a savings account.
• Pay the First Instalment: Deposit the first monthly amount at the counter to activate the RD account.
• Collect Passbook and Confirmation: The Post Office will open the account and issue a passbook containing your RD details.

Eligibility Criteria for Post Office RD

The Post Office has set out clear rules for who can open a Recurring Deposit (RD) account to follow regulations and make the process easier to manage.

• Resident Investors: The scheme is available only to resident citizens of India. Applicants must provide valid KYC documents, such as identity and address proof, at the time of opening the account.
• Single Adult: Any adult can open a Post Office RD under their own name. The person manages deposits and gets the maturity amount at maturity. Nomination facility is available.
• Joint Holders: Up to three adults can together open a joint RD account through Joint ‘A’ or Joint ‘B’ mode. Joint ‘A’ means all holders must run the account together, while Joint ‘B’ lets any one holder run it.
• Minor Eligibility: An RD can be opened by a guardian on behalf of a minor. A minor aged 10 years or above may also open and operate the account independently. After turning 18, the account must be converted into an adult account with fresh KYC.
• Authorised Accounts: A guardian is allowed to open and manage an RD for someone of unsound mind. The account is operated by the guardian following Post Office rules carefully at all times.

Key Takeaways

The Post Office Recurring Deposit provides an interest rate of 6.7% yearly, compounded quarterly, across a fixed five-year term period. The minimum monthly deposit is ₹100, with no maximum limit. Backed by the Government of India, it provides a secure savings option. After 12 instalments, a loan is available, and early closure is possible after three years. The account can also be extended for an additional five years. Investors can use the Post Office RD calculator to estimate the maturity amount in advance.