Post Office Recurring Deposit Scheme Interest Rates in 2021

India Post offers attractive rate of interest on small saving schemes. Whether you are a working professional, salaried employed, self employed or a housewife, these schemes are ideal for investors looking out for stable returns at a fixed rate. Presently India Post offers several Small Saving Schemes such as Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), 1, 2, 3 & 4 Year Time Deposit, 5 year recurring deposit scheme and Senior Citizen Savings Scheme (SCSS). Amid falling interest rates, these are attractive as well as safe.

As the New Year begins, a lot of people look forward for new schemes and rebalancing options. Post Office Recurring Deposits Scheme is one of the good choices as it offers complete security and fixed returns at 5.8%. Besides, the monthly deposit option makes affordable as well as easy to manage.

Let’s review India Post Office Recurring Deposit Scheme and know about its features, benefits, types, and interest rate of this small saving plan.

5 Year Post Office Recurring Deposit Account- Scheme & Features

Interest Rate

Post office RD offers a very attractive rate of interest of 5.8​ % per annum (quarterly compounded). The rates are subject to review by RBI. The present rates are effective from April 1, 2020.

Deposit:

• One can open the RD account with minimum contribution of Rs 100 per month. There is no maximum limit. The amount should be in multiple of 10.
• The deposit is made by cash/cheque. The date of deposit shall be date of clearance of cheque.
• The monthly deposits should be made by 15^th of each month, if account is opened between 1^st or 15^th of a calendar month.
• The monthly deposits should be made by last working day of each month, if account is opened between 16th to last working day of the month.

Eligibility for Types of Post  Office RD Schemes

The account can be opened by Indian nationals. The different types of Post Office RDs are:

• An individual (a single adult account)
• Joint Account (up to 3 adults can open together)
• A guardian can open the account on behalf of minor child
• A guardian can open for person of unsound mind
• A minor child above 10 years can also open PO RD account in own name
• There is no limit on number of accounts.

Default:

• All deposits should be made in time. A delay or default will attract subsequent late charge @ 1 rupee per Rs 100. Thus if Rs 5000 deposit is not for a month, you will be expected to submit Rs 5050 + Rs 5000 the next month.
• The account is discontinued after 4 regular defaults.
• You can revive the account within two months after the 4th default.
• There is also a provision of extending the RD due to defaults not more than 4 months.

Advance deposit:

• You can make an advance deposit for up to 5 years in an account. It can be made at the time of account opening or any time thereafter.
• You earn rebate for 6 months of instalments at a rate of Rs. 10 per Rs 100 for 6 months advance deposit, Rs. 40 per Rs 100 for 12 month advance deposit.

Loan facility:

• After 12 successful deposits i.e. after 1 year, 50% of the balance can be availed as loan. To apply for loan, you are required to submit application along with passbook to the respective Post office.
• The repayment can be made in lump-sum or EMIs.
• Rate of interest is charged as 2% + RD interest rate.
• The rate of interest on loan is estimated from date of withdrawal to date of repayment.
• In case loan is not repaid till maturity, loan plus interest will be deducted from maturity amount.

 Premature Closure:

The RD Account can be closed prematurely after 3 years by submitting an application form at the respective Post Office. The scheme will earn PO Savings Account interest premature closures. In case of advance deposit, premature closure till the deposit duration is not allowed.

Tenure/ Maturity:

• 5 years or 60 monthly deposits
• The account can be extended for next 5 years by submitting application at the respective India Post Office. Original Interest rate application for extended accounts.
• Pre-closure rules will apply to extension period as before.
• The account can be retained without additional deposits during extension period.

Repayment on death of account holder:

(i) The nominee/claimant should submit the claim at respective Post Office.

(ii) After sanction, he nominee/legal heirs can continue RD account after submitting application at the respective PO.

How are interest rates for Small Savings Schemes set?

Each quarter the government of India reviews interest rates on small savings schemes. The rates are set as per Shyamala Gopinath Committee which said that interest rates of various small saving schemes should be 25 bps to 100 bps higher than the yields of government bonds of similar maturity.

Interest rates for all Small Saving Schemes

*Source: India Post Website

FAQs

What is the eligibility for Post Office RD account? 
 

All Indian residents and Hindu Undivided Families can open an RD account with India Post. NRIs need NRO and NRE accounts for the same. A guardian/ parent can also open an RD account for the minor children.

What is the duration or tenor of Post Office Recurring Deposits? 
 

Post Office Recurring Deposit Scheme is for 5 years. You can extend the deposit as per your requirements.

Can I withdraw prematurely from my RD account?

The balance of PO RD account should be withdrawn only after completion of 5 year term. If you withdraw before the duration, you will earn interest rate of a savings account. Currently PO savings account earns 4% while PO RD earns 5.8%. Also, if the withdrawal is requested before completion of 3 months, no interest is earned on the deposit.

Is partial withdrawal allowed on Post Office Recurring Deposits?

No. Partial withdrawals are not allowed for recurring deposits of India Post. However, you can apply for 50% balance amount as Loan or Overdraft against your RD (which will be treated as collateral). Premature Closure of the account is allowed on payment of a penalty & losing the differential rate of interest with savings account.

What happens on maturity of India Post RD?

On maturity of your India Post RD account, you are required to communicate with your post office. You can visit the respective post office and make a claim. As per your request, the bank will transfer the principal amount and the accumulated interest to your linked savings account or pay by cheque. You can also extend the RD or invest the amount in a fixed deposit.

What are nomination rules for India Post Office RD account?

You can declare a nominee while opening the account. After death of the main applicant, a nominee can make a claim. Please note that only one nominee per account is permissible. You can change Nominee only through written declaration by submitting at respective PO.