Post Office RD Interest Rates

The India Post offers a five-year recurring deposit (RD) scheme that allows customers to save a part of their income and earn interest for a period of time until the amount is deposited. Typically, a customer opens a recurring deposit for a specified period during which he can make deposits monthly or quarterly, depending on the terms of the deposit scheme he selects. A recurring deposit requires the customer to make fixed deposits.

 

 

Components Of Post Office Recurring Deposit Scheme

 

• Tenure

 

Unlike most banks, the Post Office RD has a fixed tenure of 5 years. The Post Office RD has a fixed duration of 5 years, and the account must be activated within this time frame. The Post Office RD contains a provision that extends the maximum tenure to 10 years.

 

• Minimum and Maximum Deposit

 

Recurring deposits are one of the most popular investment tools and help to increase returns on monthly investments. Generally, minimum deposits are kept very low in consideration of people’s budgets, especially those who are sceptical of the interest rate and deposit amount, as well as the minimum deposit amount. The minimum amount of monthly deposit in an account shall be one hundred rupees or any sum in multiples of ten rupees

 

• Dates of Deposit

 

A post office RD requires a total of sixty deposits or one deposit per month for five years. The initial deposit is made when the account is opened, with subsequent monthly deposits due on or before a specific date, depending on the date the account was opened. Individuals who open their account between the 1st and 15th of a given month are required to make the monthly deposits up to the fifteenth day of each month. Accounts opened after the 15th of a given month must make payments between the 16th and the last day of the succeeding month.

 

• Delayed RD Deposits – Fine and Penalties

 

There are instances in which an RD account holder cannot make the minimum monthly deposit. Accordingly, a person is only allowed four such defaults before the account is transformed into a discontinued account. After four regular defaults, the account becomes discontinued and can be revived within two months of the fourth default. If the account is not revived within this period, no further deposits can be made in such an account and the account becomes discontinued.  However, the rules stipulate that RD deposits will incur a default penalty of INR 1 per INR 100, which must be paid in addition to the missed deposit amount in order to reactivate the account.

 

Premature Withdrawal of Post Office RD

 

If individuals wish to withdraw funds from their National Savings RD account prior to maturity, they cannot do so until three years have passed since the initial deposit.

 

• Investors must also submit a Form-2 application to the Postmaster General’s Office, India.

 

• When deposits are made in advance, withdrawals are only permitted after the period has passed.

 

• Account holders are eligible for Loan Against Recurring Deposits.

 

• Loan against Savings Recurring Deposit as per Form-5 Application

 

• To qualify for a loan, the account must be open for at least a year, and 12 instalments must be deposited.

 

• Loans are available for up to 50% of the RD account’s balance.

 

• As account holders, investors must pay the entire balance in a lump sum or in instalments prior to maturity.

 

Eligibility Requirements for the Post Office RD

 

To qualify for a post office RD account, individuals must meet the following requirements.

 

• Users must be Indian citizens at least 18 years old (minors must be over ten years, and parents or guardians are required to open and operate the minor account on their behalf).

 

• Eligible Indian citizens over the age of 18 may operate a single or joint RD account at the post office.

 

Documents Required

 

Individuals are required to submit the documents listed below to open an RD account.

 

• Form for opening a Post Office account

 

• Two passport-sized pictures

 

• Address or identification documentation, such as a passport, PAN card, Aadhar card, driver’s licence, ration card, or voter ID card.

 

• Identification proof for verification

 

Maturity of Post Office RD Scheme

 

• The Post office RD account matures after five years or sixty months from the date of the initial deposit.

 

• Individuals can extend this maturity date by five years by submitting a Form 4 request to the Post Office of India.

 

• The interest rate on the recurring deposit account remains the same as when the account was initially opened.

 

• Investors may close their account at any time during the extension period; however, if the extension is for less than one year, the interest rate will be the same as that of the National Savings Account.

 

• When the account is discontinued and not revived, the principal and accrued interest will be paid at maturity.

 

• Account holders may also choose to retain RD accounts for up to an additional five years following the expiration of the initial five. In this instance, the account holder is not required to make a new deposit in order to retain the balance. The account holder must only submit Form-3 to the Post Office of India.

 

Loan Against Recurring Post Office Deposit

 

• Investors can obtain a loan against their National Savings Recurring Deposit by submitting Form-5.

 

• To qualify for the loan, the account must be maintained for one year and 12 payments must be made.

 

• Investors can avail loan facility of up to 50% of the balance credit in the RD account.

 

• The loan can be repaid in a lump sum or in equal instalments by the account holder.

 

• The entire balance must be repaid prior to the maturity date of the RD.

 

• The simple interest rate applicable to the loan will be 2% + the RD interest rate applicable to the RD account.

 

• Interest will accrue from the date of withdrawal until the date of repayment in full and in proportion to the amount repaid.

 

• If the loan is not repaid, the PO will deduct the loan amount plus interest from the maturity value of the RD account.

 

• If the account is extended past its due date, then repayment can be made during the extended period.

 

• In the event that investors fail to repay the loan in full or in part, the outstanding balance will be collected from them, their legal heir, or the nominee upon account closure.

 

Repayment in Case of Death

 

• The repayment will be made to the legal heirs or nominees in the event of the death of a single account holder or all joint account holders. 

 

• If there are up to three nominees or legal heirs who survive, they can continue the RD account. In this case, they can continue as if they are the account’s owners. These surviving nominees or legal heirs will be subject to the same terms as the original account holders. However, they must submit a request to the Post Office officer.

 

• In the case of a joint account, the survivor can maintain the RD account. The surviving account holder can continue as if he or she is the account’s sole owner. However, if only six deposits have been made, the surviving member may choose to close the account.

 

• In the event of the death of the guardian of a minor or person of unsound mind, the account can be closed by a new guardian.

 

Procedure on Minor Attaining Majority

 

• When the earlier minor reaches the age of 18, he or she can continue the account by performing due diligence. The individual must provide a declaration.

 

• They can maintain the account until maturity, extend it for an additional five years, or make deposits in advance.

 

• As a major, they may make an early withdrawal or apply for a loan, as the case may be.

 

Default in Post Office Recurring Deposits

 

• If individuals fail to make subsequent deposits by the due date, you will be charged a default fee. The default fee is Rs 1 per Rs 100  denomination. The fee will be assessed for each month of default until the default is resolved.

 

• After failing to make a deposit, individuals must deposit the defaulted deposit amount in addition to the default fee. They cannot make a recurring deposit for the current month until these obligations have been satisfied.

 

• If there is a failure to deposit for four consecutive months, the account will be closed. They can revive the account within 2 months from the 4th month of default.

 

• If individuals fail to reactivate the account within this time frame, the account will remain in a discontinued state. In addition, they will be unable to make any additional deposits.

 

Post Office RD Interest Rate Calculation

 

One of the post office’s savings programs is recurring deposits. A Post Office RD Calculator is a tool for estimating the returns on investment in Post Office RDs. It is a simple and direct calculator that uses investment amount, interest rate, and time period as inputs to determine the amount of wealth gained and the total corpus created.

 

The following is the formula to calculate RD returns from the post office RD account:

 

M = R x {(1 + n) x n – 1} / 1- (1 + i) (-1/3)

 

Here,

 

R = Monthly deposited amount

 

n = Total number of quarters in the tenure

 

i = Rate of Interest divided by 400 (includes 4 quarters each year)

 

M = Maturity value

 

Inputs in Post Office RD Calculator

 

Inputs for a Post Office RD calculator are as follows:

 

• Monthly Deposit Amount: It is the amount that a person wishes to invest in RD accounts at the post office.

 

• RD Term: This is the duration of the Post Office RD scheme’s investments. A PORD has a fixed duration of five years (60 months).

 

• Recurring Deposit Interest Rate: The rate of return offered by recurring deposit schemes to account holders. 

 

Following the entry of the preceding inputs, the calculator will generate the following results:

 

• Total Investment: It represents the total amount the account holder invested over a period of 60 months.

 

• Wealth Gained: This is the interest income earned by the investor on the investment.

 

• Total Corpus Created: It is the sum total of all investments and gains. It represents the value of all investments made during the 5-year period.

 

Benefits of using a Post Office Recurring Deposit Calculator

 

The advantages of using a Post Office Recurring Deposit Calculator are as follows:

 

• Free to use: The calculator is accessible online and free for anyone to use. It can be also used multiple times without costing a single rupee.

 

• Simple and user-friendly: The Post Office Recurring Deposit (PORD) calculator is an easy-to-use tool. One can easily enter the necessary information to obtain the output.

 

• Accurate results: The accuracy of the calculator’s output is quite high, and the probability of error is close to zero. One can easily rely on the calculator’s results.

 

• Saves time: Calculating the interest earned on an RD investment can be laborious and time-consuming. Using the RD calculator for the same purpose saves the investor time.

 

• Comparison: Using the calculator, one can compare multiple banks’ RD with the Post Office’s RD and select the one with the highest return.

 

• Future planning: The calculator enables investors to more effectively plan their investments. By understanding the potential returns of an investment, investors can better plan their objectives.

 

Interest Rates for Post Office RD in 2022

 

Every quarter, the government determines the Post Office RD rates. The Post Office RD’s interest rate is regulated by the government and is announced once every three months. The interest in PORD is compounded every quarter. Currently, the rate of interest is 5.8%  per annum (quarterly compounded)

 

Tenure	RD Rates for General Citizens	RD Rates for Senior Citizens
5 years	5.8% p.a. (Compounded quarterly)	5.8%p.a.(Compounded quarterly)

 

Frequently Asked Questions (FAQs)

 

• What are some important features of Post Office Recurring Deposits (PORD)?

 

• • A National Savings Recurring Deposit Account can be opened even by minors aged 10 years or above.  The post office requires a minimum deposit of Rs. 100 to start an RD account. There is no cap on how much money account holders can deposit each month in multiples of Rs. 10.

 

• • The maximum term for post office RD accounts is five years, and it is possible to extend it for a further five years by submitting a formal application.

 

• • After a year has passed, depositors with Post Office RD accounts may also apply for a loan. Borrowers can avail of 50% of the available balance.

 

• • At any point during the RD duration, they have the option to make a lump sum repayment of the loan and interest.

 

• • A post office recurring deposit’s interest is compounded every three months.

 

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