Features Of 5 Year Post Office Recurring Deposit Scheme

  • To open a Recurring Deposit account, a minimum amount of Rs.10/- per month or any such amount in multiples of Rs.5/- can be deposited by a customer. Also, the customers can invest as much as they want per month in the Recurring Deposit account.
  • The Recurring Deposit account is transferable from one post office to the other.
  • There are no limits to the number of Recurring Deposit accounts that a customer can open. These Recurring Deposits can be opened in any post office.
  • The customer can open the Recurring Deposit account by either paying in cash or cheque. The date of the cheque will be considered as the date of opening of the account, if the payment is made by cheque.
  • It is possible for the customers to get the nomination facility not only while he is opening the account, but also later on.
  • After opening the account, the customer can withdraw 50% of the balance of the account after one year.
  • Any customer who pays six months deposits at a time can get the rebate.
  • Customers can change their single account into a joint account, and vice versa.
  • In case, if the minor account holder becomes a major, he has the right to change the account on his name.
  • The customer is supposed to pay a default fee at the rate of 5 paise for every Rs.5/- of the deposit amount for any delay in paying the deposit amount. Also, in case if the customer fails to pay for four consecutive times, then the account can be discontinued, and after that, the account can be reused only after two months. The customer will not be able to make any further deposits, if the customer does not reuse the account in two months.
  • The next due date for depositing the payments, in case if the Recurring Deposit account is opened on the 15th of the month is the 15th of the following month. However, in case if the account was opened on the 16th of the month or till the last date of the month, then in such cases the consecutive deposit will be made on the next month's last date by the customer.

Eligibility

  • Customers can open the Recurring Deposit Accounts either in the form of single account or as joint accounts.
  • The Recurring Deposit Account is possible in the name of a minor. Minors who are aged 10 and above can open, and operate their account.

Interest Rate

The Recurring Deposit Scheme provides an Interest Rate of 7.30% per annum. This interest on the deposit will get compounded quarterly.


Post Office Recurring Deposit Online Payment

Indian Post has now introduced the India Post Payments Bank (IPPB), which will help you to make the monthly deposit payments of Recurring Deposit account online. The customer needs to visit the post office once for opening the Recurring Deposit account, and after that, the customer can manage his Recurring Deposit account using the IPPB app on their mobile. The following are the steps for making the monthly deposit payments in the post office RD account through IPPB:

  • Step 1: , Transfer money from your bank account to the IPPB account
  • Step 2: Go to DOP Products and choose Recurring Deposit.
  • Step 3: Put your Recurring Deposit account number and then put the DOP customer ID.
  • Step 4: Now choose the instalment amount and the duration.
  • Step 5: IPPB will send a notification to you for successful payment of your monthly instalment in your Recurring Deposit account which was done using the IPPB mobile application.

Withdrawal Of The Deposit Amount Before The Maturity From The Post Office Recurring Deposit Account

There are chances that the customer is in urgent need of money. Although it is not at all advised to close the Recurring Deposit account before its maturity, there are provisions for withdrawing the deposit amount before the maturity of the Recurring Deposit account.

The following are some of the points related to the provisions of withdrawing the deposit amount before the maturity of the Recurring Deposit account.

  • To withdraw the deposit amount from the Recurring Deposit account, it is necessary that the account is active for a minimum period of one year.
  • A minimum of twelve monthly deposits are made into the Recurring Deposit account for a withdrawal before the maturity.
  • Usually, only one withdrawal is allowed if all the conditions are satisfied. However, the amount of withdrawal amount should not be more than 50% of all the deposits until the said date.
  • The withdrawal from the Recurring Deposit account should be in multiples of Rs.5.
  • The customer needs to repay either in equal instalments or in a single lot for any amount that is withdrawn by the customer.
  • The interest has to be paid by the Recurring Deposit account holder on the amount that he has removed from the Recurring Deposit account.
  • The repayment of both the amount withdrawn and the interest on it has to be repaid before the maturity of the Recurring Deposit account.

Post Office Recurring Deposit Tenure

At present, customers can open the Post Office Recurring Deposit account, and they need to make sure that their deposits are active for a minimum period of 5 years.
Customers who opt to continue with their Recurring Deposit account even after five years have ended can further extend their Recurring Deposit account for another five years. Thus, the entire tenure, in such a case, will be ten years. Also, one of the other good things is that the interest that is earned during the five years tenure will still be compounded quarterly.


Amount Of Deposits

The Post Office Recurring Deposit account gives a chance to the customers to save for their future. The minimum amount of deposit to be made in the Post Office Recurring Deposit account is meagre.

The minimum amount of deposit that a customer can make every month is Rs.10/-. Also, there is no maximum amount of deposit that a customer has to make every month. Also, the customer can increase their deposit amount in multiples of Rs.5.


Deposit Dates For Post Office Recurring Deposit Account

The customer who opens a Post Office Recurring Deposit account will have to make 60 deposits in five years. i.e., each month for five years he will have to deposit the amount. . The first deposit is to be made while opening the Recurring Deposit account with the post office. The deposits to be made after that will depend on the day when the Recurring Deposit account was opened.

Any customer, who opens the Recurring Deposit account from the 1st to 15th of the month, will have to make all the other deposits on the 15th of the next month. Also, the customer who opens the Recurring Deposit account between the 15th and the last day of the month will have to make all the other deposits on the last day of the next month. The customer can pay these deposits to the Recurring Deposit account through a Demand Draft, a Pay Order, or a Cheque.


Delayed Rd Deposits – Fine And Penalties

Many times, it's possible that the customer is not able to make the monthly deposit payment in the Recurring Deposit account. If the customer fails to pay four such consecutive deposit payments, the Recurring Deposit account will have to be ceased. Such ceased accounts can only be reused within two months after the customer fails to make the deposit payment to its Recurring Deposit account for the 5th time.

The customer will be entitled to pay five paise for every Rs.5/- which were to be deposited in an account as a default penalty. So, if the customer wants that his Recurring Deposit account can be reused, then he will have to pay this penalty along with all such deposits that he has failed to pay.


Post Office Recurring Deposit Rebate

The Post Office Recurring Deposit offers a rebate in case if the customers make an advance payment of the deposits. These rebates are not much; however, it can help such a customer who has fewer resources to save a decent amount of money for some other purpose.

The customer can get a rebate of Rs. 1/- for every Rs.10/- deposited, when he makes a minimum of 5 advance deposits or maximum of 11 advance deposits for his Recurring Deposit Account. In the event of the customer making advance deposits which are more than 11, he can get a rebate of Rs. 4/- for every Rs. 10/- for the 12 advance deposits and Rs. 1/- for every Rs. 10/- for the advance deposits which are beyond 12.

Thus, this five year Post Office Recurring Deposit scheme introduced by the Indian Post is undoubtedly going to very popular amidst all types of investors because it can inculcate a habit of saving money every month and also, as it provides a good interest on the deposits made. So, the investors who are looking for a safe and high rate of return on the investments made by them should surely look for the five year Post Office Recurring Deposit scheme.


Frequently Asked Questions

Q- Can I Withdraw my RD before maturity in post office?

Yes, but there are certain considerations to be fulfilled:

  • To withdraw the deposit amount from the Recurring Deposit account, it is necessary that the account is active for a minimum period of one year.
  • A minimum of twelve monthly deposits are made into the Recurring Deposit account for a withdrawal before the maturity.
  • Usually, only one withdrawal is allowed if all the conditions are satisfied. However, the amount of withdrawal amount should not be more than 50% of all the deposits until the said date.
  • The withdrawal from the Recurring Deposit account should be in multiples of Rs.5.
  • The customer needs to repay either in equal instalments or in a single lot for any amount that is withdrawn by the customer.
  • The interest has to be paid by the Recurring Deposit account holder on the amount that he has removed from the Recurring Deposit account.
  • The repayment of both the amount withdrawn and the interest on it has to be repaid before the maturity of the Recurring Deposit account.

Q- What is the interest rate on Post office RD?

The current rate of interest on post office RD is 7.3.% p.a.


Q- What is the post office Time deposit?

Ans: The Post-Office Term Deposit (POTD) Scheme is an investment savings account scheme offered by the India Post (Department of Posts). This scheme is meant for those depositors who want to deposit a lump sum of money for a fixed five-year tax saving fixed deposits.


Q- What is RD in the post office?

Ans: One of its most well-known banking services is the post office recurring deposit scheme. The 5 year Post Office Recurring Deposit (PORD) scheme allows you to save on a regular monthly basis for 5 years i.e. 60 monthly installments. These deposits earn interest as per applicable rate compounded on a quarterly basis.


Q- What is RD interest rate in the post office?

Ans: Post office RDs offer an interest rate of 7.3% per annum compounded on a quarterly basis.


Q- What is recurring deposit account?

Ans: Banks offer the facility of maintaining a recurring deposit to allow people to deposit a fixed amount every month and earn interest rate applicable to fixed deposits.


Q- What is the senior citizen saving scheme?

Ans: Senior citizen savings scheme, 2004 (SCSS) is eligible for deduction under section 80C. An SCSS account can be opened by a senior citizen of India. If an individual has opted for voluntary retirement scheme or retired between age of 55 and 60 years, can invest in SCSS account within one month of retirement. The defence personnel can opt for this scheme if retire at age of 50 years or thereafter. Any other individual can opt for this scheme above the age of 60 years. An SCSS account is a safe method of parking your savings, earning interest thereon and availing tax benefits.


Q- What is the interest rate of the post office?

Ans: There are many types of deposit/saving schemes in a post office. The interest rates for each type of scheme are : Savings Account – 4.0 %, Recurring Deposit – 7.2%, Monthly Income Scheme – 7.6%, Time Deposit (1,2,3 year) – 6.9 %, Time Deposit (5 year) – 7.7%, Kisan Vikas Patra – 7.6 %, Public Provident Fund – 7.9 %, Sukanya Samriddhi Yojana – 8.4%, National Savings Certificate – 7.9%, Senior Citizens Savings Scheme – 8.6%.


Q- What is postal banking?

Ans: Postal Banking refers to the facility of financial and banking services provided through postal system.


Q- Which bank gives maximum interest on a savings account?

Ans: The highest Saving Account interest rate is being offered by digibank by DBS at 7% for balance between Rs 1 to 2 lakh and IDFC Bank for more than Rs 2 Lakh balance.


Q- Which is the best post office scheme?

Ans: The post office schemes which are eligible for deduction under section 80C are 5 year time deposit, public provident fund, sukanya samriddhi yojana, national savings certificate and senior citizen savings scheme (SCSS). Out of them the highest rate of interest is offered by SCSS of 8.6%. However, only senior citizens are eligible for investing in SCSS. Hence, for individuals who are not senior citizens, the highest rate of interest is offered by Sukanya Samriddhi Yojana. Hence, the best post office scheme for senior citizens is Senior Citizens Savings Scheme and for other individuals, it is Sukanya Samriddhi Yojana.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.