Post Office Recurring Deposit Account

India Post provides a host of savings schemes to the general public through a network of post offices across the country. The saving schemes offered by India Post are government schemes so they are completely risk-free. The Post Office Recurring Deposit Account (RD Account) is one of such savings schemes.

What is Post Office Recurring Deposit Account? What are the salient features of the Post Office RD Account? Who are eligible for opening this account? How to open a Post Office RD Account?

To answer the above questions, let us discuss in detail about Post Office Recurring Deposit Account.

Table of Contents

What is Recurring Deposits Account?

The recurring deposit account is a unique term deposit account offered by a bank or post office. A recurring deposit scheme commonly known as the RD account.

This account allows you to deposit a fixed amount of money every month for a fixed period. Generally, the term ranges from one year to five years.

It is meant for people with regular incomes to deposit a fixed amount every month and earn decent returns. This way, you can build an attractive sum on maturity by depositing a little money every month.

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Post Office Recurring Deposit Account is a popular savings scheme. It is one of the 9 small savings schemes offered by India Post. It opened for a fixed period of 5 years.

Post Office RD account provides the facility of saving a small amount of money every month to help you reach your financial goals. You earn relatively higher interest on your deposit which is compounded quarterly.

RD scheme serves as an opportunity for those individuals who earn a regular income. The money deposited in post office RD is safe and secure. You will get your money back along with the interest at the end of the term.

Salient features of Post Office RD Account

There are various features of this savings scheme which makes it an attractive investment option for the general public. Here are some salient features of this scheme.

Opening an Account

1. To open an account, you need to deposit a minimum amount of Rs.100/- each month or any amount in multiples of Rs.10/-. There is no maximum limit, you can invest as much as you want per month.

2. You can open an RD account in the post office with either cheque or cash. If the payment made by cheque, the date of deposit shall be the date of clearance of cheque.

3. Nomination facility is available at the time of opening the account and also later on.

4. The RD scheme comes with a maturity period of five years. The account can be continued for another five years by giving an application.

Operation

5. This account is transferable from one post office to another.

6. You can open any number of accounts in any post office of their choice.

7. The minor account holder after attaining the majority has to apply for the conversion of the account in his name.

8. Individuals can change their single account into a joint account, and vice versa.

Deposit Date

9. If an account has been opened up to 15th of a calendar month, then the subsequent deposit can be made up to the 15th day of next month. If an account has been opened between the 16th day and the last working day of a calendar month, then the subsequent deposit can be made up to the last working day of next month.

Rebate & Withdrawal Facility

10. You can avail rebate facility on advance deposit of at least 6 installments. The rebate is Rs.10 for 6 months and Rs.40 for 12 months. You will get a rebate for the denomination of Rs.100.

11. You can withdraw 50% of the balance of the account a year after opening the account.

Online Deposit Facility

12. The online deposit facility is available through Intra Operable Netbanking/Mobile Banking.

13. Online Deposit facility is available through IPPB (India Post Payments Bank) Saving Account.

Default Fee

14. A default fee at the rate of Rs.1 is charged for every 100 rupees if the subsequent deposit is not made up to the prescribed day. After four consecutive defaults, the account becomes discontinued. If you will not revive it within 2 months then you will not be able to make any further deposits.

15. In case of monthly default, you have to first pay the defaulted monthly deposit with the default fee and then pay the current month deposit.

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Eligibility for opening Post Office RD Account

You must meet these criteria to open an RD account in Post Office

1. Indian citizens who are over the age of 18 years can open an account either singly or jointly with one or two other adults.

2. Minors who are above 10 years of age.

3. Parents or guardians on behalf of a minor/Person of unsound mind.

How to open a Post Office RD Account?

You can open an account by visiting the nearest post office. You can open a post office RD by cash as well as cheque.

Note that if you pay by cheque, the date of deposit shall be the date of clearance of cheque.

The minimum amount required for opening an account is Rs.100/- per month. You can also open an account in the name of a minor.

Post Office RD Account Online Payment

Now, you can pay your monthly installment of the RD amount online. You need to visit the post office once for opening the account. Once an account opened then you can manage it using the IPPB app on your mobile.

The following are the steps for transferring money online into your account using the IPPB app.

1. First of all, you need to add money from your bank account to the IPPB savings account.

2. Next step, go to DOP products and choose the RD account.

3. Enter your account number.

4. Next, write your DOP customer ID.

5. Here, select the installment amount and duration.

6. Once done, you will get a notification for successful payment transfer made through IPPB mobile app.

Post Office Recurring Deposit Account Interest Rate

The Government announces the rate of interest for this small savings scheme every quarter. The current rate of interest effective from 01/04/2020 is 5.8% per annum.

The interest on the deposit compounded quarterly. On maturity Rs.100/- account fetches Rs.7231.38. Such relatively higher interest makes it one of the most preferred investment options.

Maturity Period of Post Office RD Account

The maturity period of the post office recurring deposit account is five years. However, you can extend it further 5 years by giving an application.

Deposit Dates for Post Office Recurring Deposit Account

You need to make 60 deposits in 5 years if you open a Post Office Recurring Deposit account. It means you have to deposit the amount every month for five years.

You have to make the first deposit at the time of opening the account. The date of subsequent deposits will depend on the day of the opening of the account.

If an account has been opened up to 15th of the month, then you have to make all the subsequent deposit up to 15th of the next month.

If an account has been opened between the 16th and last working day of the month, then you have to make all the subsequent deposit up to the last working day of next month.

Premature Withdrawal

There are certain situations in life when you are in urgent need of money. While it is not advisable to close it before its maturity, there is a provision for premature withdrawal of the RD.

Here are some important points related to the premature withdrawal of the amount in an RD.

1. Premature withdrawal permitted after one year.

2. A minimum of 12 monthly installments should have been deposited into the account.

3. Only one withdrawal up to 50% of the balance is allowed if the above conditions are satisfied.

4. You have to pay the interest at the prescribed rate on the withdrawn funds.

5. You need to repay the withdrawal amount in one lump sum along with interest at any time during the currency of the account.

Late Payment Charges

A default fee is Rs.1 is charged for every 100 rupees if the subsequent deposit is not made up to the prescribed day.

If there is a monthly default then you have to first pay the defaulted monthly deposit with default fee and then pay the current month deposit.

In the event of four regular defaults, the account becomes discontinued. If you will not revive it within 2 months then you will not be able to make any further deposits.

Final Thoughts

Post Office Recurring Deposit Account is the simplest and convenient investment option for the general public. The Post Office RD account does not require a huge amount of money at one go. You need to deposit a fixed amount of money every month for a fixed period. This will inculcate the habit of regular savings in you.

Note: This post was originally published on March 27, 2020 and has been completely updated for accuracy and comprehensiveness.

Post Office Recurring Deposit Account – Post Office RD Account