Post Office RD Interest Rate

Post offices are popular in Indian and the main reason is, it provides services more than posting mails. Whether it is a life insurance product or small savings schemes, post offices offer many savings alternatives for working-class people. Out of all the other traditional fixed deposits and long-term savings schemes provided by Post offices- recurring deposit is widely popular among individuals.

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Post Office RD Calculator

Monthly Investment

₹500 ₹1L
Enter Monthly Investment

Rate of Interest (Yearly)

1% 10%
Rate of Interest (Yearly)

Time Period

1 Year 10 Years
Enter Time Period
Total Investment
Interest Earned
Maturity Amount
The rate of interest may differ from bank to bank and decided by the bank only. But what if you can calculate Recurring deposit ROI on your own? Yes, it is possible with the help of RD Calculator

Many people prefer to invest in post office recurring deposits over banks. The reason behind this vast preference of the masses is the attractive interest rate that post offices provide upon maturity.

The interest rate on post office recurring deposits is revised regularly every year. For the current financial year, the post office RD interest rate is 5.8% per annum which is compounded quarterly.

Interest Rate 5.8% p.a. (Compounded Quarterly)
Tenure 5 years
Minimum Deposit ₹ 100 Per Month
Maximum Deposit No Upper limit (Any amount in multiple of ₹ 10)
Missed Deposit Penalty ₹ 1 for every ₹100.

How to Calculate Post Office Recurring Deposit Returns?

The following compounding interest formula is used to calculate the sum of interest on post office recurring deposit:

A= P x (1+R/N) ^ (Nt)

Refer to the table to address the formula:

A Maturity Amount
P Recurring deposit
N Number of times the interest is compounded
R Rate of interest

Let's take an example:

Ms. Shalini invests ₹ 7,000 into her post office recurring deposit account at the rate of 5.8% for 60 months. She is entitled to receive the accrued maturity amount, i.e. 

A= P x (1+R/N) ^ (Nt)

= ₹ 4,87,877

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Tenure of the Recurring Deposit

Post office recurring deposit is considered as a medium-term investment option by working-class people. Many people invest in RD to secure their immediate future against unfavourable events of life. If you are planning to invest in a post office RD account, make sure to pay continuous deposits for the next 5 years because the minimum tenure of a post office RD account is 5 years. 

Also, if you wish to continue the tenure after this period you can extend as per your convenience because there is a provision that permits the extension of the post office RD account. However, you can only extend the RD account tenure up to a maximum of 10 years. Moreover, the calculation of compound interest every quarter will remain the same in the case of extended tenure.

Features of Post Office RD Interest Rates

  • For the current financial year, the post office RD interest rate is 5.8% p.a. compounded quarterly.
  • The minimum tenure of a post office recurring deposit is 5 years.
  • One is allowed to make a minimum of ₹10 deposit in the Post office RD account. There is no limit for maximum deposit in the post office RD account. 
  • You will be charged ₹ 1 for every ₹ 100 as a penalty for missing to pay the deposit in the post office RD account. 
  • One can open a joint RD account in the post office for 2 persons.
  • You can get a rebate if you have made advanced deposits for at least 6 months. 

You can transfer your post office recurring account from one post office to another.
Deposit Limit in the RD Account

A recurring deposit is considered the most comfortable investment tool to earn profitable returns at maturity. Usually, people do not go for big investments because it requires big monthly deposits; however with a post office recurring deposit, one can make deposits as per their convenience. The minimum deposit which you can make as per post office RD rules is ₹ 10 per month. This way the monthly investments won't make a hole in the pocket of any individual. This has made it very easy to invest for the future even for those who just survive on minimum wage. Also, there is no limit for maximum deposit. As per the rule, one can increase the deposit amount in multiples of ₹ 5 as per their convenience. 

This means, there is always a chance of growth in investment as per your raise in revenue.

Recurring Deposits Dates 

  • As per the minimum tenure i.e. 5 years, you are required to make 60 deposits during that tenure. That means one deposit every month for the next 5 years. 
  • You make the first deposit when you open the post office RD account. Then, you make the next deposit either on the decided date or on the date the account was opened.
  • Deposits made in a recurring deposit account at the post office come with a grace period. This means, if you opened the account between the 1st and 5th of a month, you are supposed to make the next deposits every month between 1st -5th for the next 5 years. 
  • If you have opened the account after the 15th of a particular month, you are supposed to make the deposit between the 16th and the last day of the subsequent month.

Penalties on Delayed Deposits

There might be days when you will be unable to make monthly deposits due to some reason. According to the post office RD rule, you are allowed a maximum of 4 such defaults, post which your account will be turned inactive. You can revive your account within 2 months but after the next (5th default). As per the post office RD rule, you will be charged ₹ 1 for every ₹ 100. You will have to pay this penalty besides the regular deposit in order to revive your RD account. 


As a reward mechanism to motivate people to make advance deposits in their post office RD account, post offices offer a rebate. The rebate doesn't seem much in terms of reward, however, it still saves some amount for those who need it. The table below highlights the rebate options provided with a Post Office RD.

Number of Advance Deposit Instalments Quantum of Rebate
6 ₹ 10 for every ₹ 100
12 ₹ 40 for every ₹ 100

Premature Withdrawal:

If for any reason you want to fund your urgent requirements you can withdraw from the post office RD account. However, you must keep the account active for at least 1 year. Also, you can only withdraw 50% of the available amount in the RD. 

The ongoing interest rate would be applied to the withdrawn funds. You are required to repay the withdrawn amount (as and when you can) in lump-sum with the interest applicable. 

Who is Eligible for Opening an RD Account?

If you want to open a Post office RD account, you must meet the following criteria:

  • 18+ years old Indian Nationals.
  • 10+ years old (Minors) 
  • Parents or guardians who wish to open and operate the account of a minor on their behalf.

A 10+ years old Minor can operate their account jointly with their guardian. There is no option for a minor to operate a single RD account.

Final Word

Recurring deposits are considered one of the best ways to make long-term or short-term investments at affordable monthly deposits. A cherry on top of the cake is the interest rate provided by the post office. The compounding interest calculation alongside the minimum deposit of ₹10 makes it feasible to invest even for those who survive on marginal wages.

The interest rates are subject to change every year, that is why it is advisable to check the ongoing interest rates before opening a post office recurring deposit account.


  • What is the interest rate of RD in post office?

    The interest rates of RD in the post office are revised regularly every year. For the current fiscal year, the RD Interest rate of the post office is 5.8% p.a. which is compounded quarterly. The minimum amount for opening of account is Rs. 100 per month or any amount in multiples of Rs.10 and there is no maximum limit. 
  • Which RD is better bank or post office?

    Post office RDs have become the most desired tools when compared to RDs in the bank. One of the main reasons behind its popularity is the striking interest rates one can earn and a large profit upon maturity. The RD post office interest rates are revised at some intervals and the usual rate of interest is 5.80%. One of the major benefits of post office RD is that this account can be transferred from one post office to another and one can open any number of accounts in any post office for varying maturities and amounts. Both types of FDs are beneficial but the selection depends on your financial objectives. One should always choose the investment tool as per their requirements. 
  • How is RD interest calculated?

    The amount of interest on RDs is usually compounded every quarter. The following formula is used by banks to compute how much the interest component on an RD will be at maturity: 
    M = R [(1+i) n-1]/1-(1+i) (-1/3)
    Where M is the maturity value of the recurring deposit
    R is a Monthly installment that is credited in RD 
    n is the number of quarters 
    i = Interest rate/400 
  • Which is best RD or FD in post office?

    Selecting from the two options depends on individual financial objectives. Both tools of investment generate a good interest rate and have low risk. If you want a regular income source, then you should opt for Fixed Deposits as it helps you to make periodic payments. Moreover, Fixed deposit is suitable if you want large FD interest rates. Retired persons and senior citizens should go for this type of investment tool. 
  • Are Post office RDs tax-free?

    The Post Office RD is relieved from tax deductions u/s 80C of the ITA, 1961 and insurance buyers can claim up to 1.5 lacs p.a. as tax exemption. So, the interest generated through the post office RD will be subjected to tax cuts. 
  • What is the benefit of RD in post office?

    There are a number of benefits of RD in the post office, 
    • The rate of interest offered by the Post office on Recurring deposits is 5.80% per annum compounded quarterly 
    • The tenure for a post office RD is 5 years 
    • The minimum deposit in an RD post office account is Rs. 10 Per month 
    • No cap on the upper limit 
    • The post office RD can be transferred from one post office to another 
    • A joint account can be opened by 2 persons
    • Get Tax benefits u/s 80C of ITA, 1961. Individuals can claim up to 1.5 lacs pa tax exemption under this. 
  • Is post office RD a good investment?

    Usually, RD in the post office is among the most popular savings alternatives to traditional FDs and other long-tenured schemes offered by post offices. Post office RD offers attractive interest rates and a great amount of profit upon maturity. The usual rate of interest is 5.80% pa which is compounded quarterly and it helps the money deposited to increase till the maturity period. This is a great option for a good investment.
* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)
** Fixed deposit rate applicable for 5 year's 1 day to 10 years for investment amount less< 2 Crore ( Not for senior citizens).
*** PPF interest rate applicable for 15 years for investment amount upto 1.5 Lac
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
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