Post Office Recurring Deposit

Post Office Recurring Deposit has always been a popular investment instrument for investors as compared to the bank. It is a reliable savings account, which helps investors to accumulate wealth in the long-term. One of the primary reasons, why it is popular among investors is that it offers an attractive interest rate and guaranteed return upon maturity.

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The interest rates applicable on post office recurring deposits are revised in a proper interval and is currently 7.2% per annum (compounded quarterly).  Further in this article, we have discussed in detail different aspects of post office recurring deposit.

Features of Post Office Deposits

  • Post office RD comes with a tenure of 5 years.
  • One can make a minimum deposit of Rs. 10 per month in the PORD account.
  • The interest rate applicable on the Post Office RD account is 7.2% per annum compounded quarterly.
  • The investors can transfer the post office recurring deposit account from one post office to another.
  • As per one’s suitability, an individual can also open a joint account.

Tenure of Post Office Recurring Deposit

Unlike bank recurring deposit, the post office RD have fixed tenure i.e 5 years. Most individuals open an RD account intending to fulfill short-term financial goals. However, if one wants to extend the RD account then he/she can extend it to another 5 years making a maximum tenure of 10 years. Moreover, the extended RDs will continue earning the interest as earlier compounded quarterly.

Dates of Deposit

In post office RD the investors need to make a total deposit of 60 during the tenure monthly for a tenure of 5 years. The first deposit will be made at the time of opening the account following the subsequent monthly deposits on or before a specific date, depending on the date the account was open.

How to Open Post Office RD Account?

One can open the RD account by visiting the nearest post office and submitting the RD form along with the pay-in-slip with the initial deposit. Senior citizens have different account opening form.

Post Office Recurring Deposit  Withdrawals

After completion of the 1 year, the depositors can withdraw up to 50% of the available balance in the recurring deposit account. whereas, the minors need to convert their account to regular RD accounts for withdrawals, which is possible after maturity.

Post Office Recurring Deposit Rebate

To encourage people to inculcate the habit of regular savings and to deposit money in advance, the post office RD  provides a rebate on advanced deposits. The rebates may not sum up to a large amount but can contribute to saving a substantial amount for other purposes. Below we have mentioned the detail of the RD rebate.

Number of Advance Deposit


More than 5 -lesser than 11

Rs.1  for every Rs. 10 deposit

More than 11

Rs. 4 for every Rs. 10 deposited – for 12 deposits

Rs 1 for every Rs. 10 deposited after 12 months


Post Office Recurring Deposit Payment Default

Post office RD account charges a penalty for every default.  This penalty is applicable at the rate of 5 paise for every Rs. 5. For a single default, the depositor needs to pay the penalty for the missed month as well as the current month. In case the depositor fails to contribute to the account for 4 regular intervals the account will be closed.  the account holder can open the account within two months from the date of discontinuation of the account. However, after two months the account will be closed permanently.

Wrapping it Up!

A recurring deposit is the best way to inculcate the habit of savings as it can help you to create a financial cushion and achieve your long-term goals. Moreover, with a high-interest rate,  the post office recurring deposit account helps to gain a guaranteed return on investment with a minimal deposit amount. However, if you want to make investments for the long-term and are aiming for higher returns then you can consider investing in instruments like Bank FDs, Mutual Funds, etc.

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