The Post Office Recurring Deposit Account or Post Office RD, offered by the Department of Post, Government of India, is a popular savings scheme designed to help individuals save consistently for their future.
It’s also known as the National Saving Recurring Deposit Account. This scheme is accessible at post office branches across the country and is particularly beneficial for those with low incomes and anyone looking for a structured savings plan.
How to Open a Post Office Recurring Deposit Account
You can open an RD account at any post office by filling out an application form or through designated agents. The account can be opened in various ways:
- By a single adult
- Jointly by up to three adults
- By a guardian on behalf of a minor
- By a guardian on behalf of a person of unsound mind
- By a minor above 10 years in their name
Monthly Deposits in Post Office Recurring Deposit Account
- Amount: You need to deposit a minimum of Rs. 100 per month, and deposits should be in multiples of Rs. 10.
- Consistency: The initial deposit amount stays the same throughout the account’s tenure.
Deposit Deadlines
- For Accounts Opened Early in the Month: If you open your account by the 15th of the month, your deposits are due by the 15th of each subsequent month.
- For Accounts Opened Later in the Month: If you open your account between the 16th and the last working day of the month, your deposits are due by the last working day of each subsequent month.
Handling Defaults
- Penalty: You’ll be charged Rs 1 for every Rs 100 denomination for each missed month.
- Account Revival: Your account becomes discontinued, if you miss four consecutive deposits. You need to deposit your dues within 2 months of the fourth default to revive.
- Extension Option: You can extend the account’s maturity period by the number of defaulted months. But default months should be less than 4.
Account Maturity Duration in Post Office Recurring Deposit Account
- Duration: The account matures after 5 years, encouraging regular savings.
Interest Rate
- Current Rate: The annual interest rate is 6.7%, compounded quarterly.
Loan Facility for Post Office RD
- Eligibility: You can take a loan after one year of account operation and 12 monthly deposits.
- Loan Amount: Up to 50% of the deposited amount.
- Interest Rate on Loan: 9.5% per annum on the borrowed amount.
Premature Closure
- After 3 Years: You can close your account prematurely after three years by submitting the required form.
- Interest Rate: If you close the account before maturity, the Post Office Savings Account interest rate applies.
- Restrictions: If you make advance payments, you can’t close the account prematurely.
Insurance Benefit
- Coverage: The Protected Savings Scheme offers insurance coverage to legal heirs if the depositor dies during the maturity period, based on certain conditions.
Withdrawal and Continuation
- At Maturity: You can withdraw the maturity amount or choose to extend the account for up to 5 years, earning the prevailing interest rate.
Summary
The Post Office Recurring Deposit Account is a reliable savings option, especially for those with modest monthly budgets.
The banking system is complex and not too friendly for low-income earners. Post Office & products like Post Office RD help financially including this section of society. Please help if you encounter a person wanting to deposit a small amount for his life goals.
With its structured deposit system, attractive interest rate, and benefits aimed at financial security, the RD account is a valuable tool for building financial discipline and encouraging consistent savings habits among various segments of the population.
