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India Post Office RD Interest Rates 2021

India Post Office RD Rate of Interest, 2021

Last Updated 25th Nov 2020

Tenure General Rates Senior Citizen Rates
5 years to 5 years 5.80% 5.80%
    India Post Office RD Calculator
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    India Post Office Recurring Deposit

    • India Post Office offers RD interest rates up to 5.80%
    • Interest on RD with India Post Office is compounded quarterly.
    • India Post Office accepts minimum deposits starting at 100.
    • For senior citizens India Post Office offers RD rate upto 5.80%.
    Post Office RD Rates - Special Features
    • The account can be opened by cash or Cheque
    • Nomination facility is available
    • Premature closure is allowed after three years from the date of opening of the RD account
    • In case of premature withdrawal, interest at the rate applicable from time to time to the Post Office Savings Account will be payable on such premature closure of the RD account
    • Date of maturity will be 5 years after the date of opening.
    • The account can be extended for a further 5 year
    • One loan up to 50% of the balance allowed after one year
    • The deposit tenure ranges from 5 years to 5 years
    • Visit any India Post Office branch to avail this service
    • TDS deductions are subject to the existing income tax rules as at the time of opening the RD account
    • 1 Rs for every 100 rupee shall be charged

    India Post Office Recurring Deposit Schemes Types

    Based on the tenure India Post Office Recurring Deposit can be classified into three types, these are:

    Short-Term RD

    Under this type of India Post Office Recurring Deposit your deposit’s tenure ranges between 6 months to 3 years. Such RD is best suited for those who are looking to develop the habit of savings. 

    Medium-Term RD

    When you are not willing to commit for the long tenure and are not sure how much benefit you can get from RD, then opting for medium term recurring deposit is a good decision. It provides the right balance of flexibility and commitment to invest  so that you can assess its benefits. The tenure basically ranges between 3 years to 7 years. 

    Long-Term RD

    The long term RD is best suited when you want to earn the return on your investment but do not have the lump sum amount to invest in fixed deposit. By investing recurring deposits you get the flexibility of making monthly investments, and earn the return similar to FD. The tenure basically ranges between 7 years to 10 years.

    India Post Office RD Account

    India Post Office offers recurring deposit option to their customers to park their periodically generated surplus savings for a fixed tenure. A customer is required to make a deposit once into their RD account at the time of opening the account with the bank. The customer then makes periodic deposits and withdraws any money in the account during the tenure of the deposit.

    India Post Office Recurring Deposit Rates

    There are some factors that affect India Post Office Recurring Deposit interest rates. These are as follows:

    • Policies Framed by RBI : The change in Cash Reserve Ratio (CRR) and repo rate as directed by the RBI affect the interest rate of all banking instruments including the recurring deposit.
    • Recession – In times of recession, RBI releases funds in the market and hence injecting liquidity in the market. As a result of high liquidity and low credit demand, banks reduce the rates on RD.
    • Inflation – Inflation has a positive effect on a fixed deposit interest rate. Hence, RD rates tend to be higher in a period of rising inflation.
    • Current State of Economy – In a booming economy, people take larger credit to meet their personal and business requirements. In periods of high credit demand, banks offer higher interest rate to garner more funds through recurring deposits.

    India Post Office RD Interest Calculator

    RD maturity amount that you will get depends on the following three parameters

    • Deposit amount – This is the initial amount deposited by a customer in India Post Office. Higher interest rate might be offered on larger deposits. India Post Office offers deposit amount starting at 100.
    • Rate of Interest- India Post Office offers a higher rate of interest on recurring deposits of longer tenure and lower interest rate on deposits held for a shorter period. Highest interest rate offered by India Post Office is 5.80% for deposit amount.
    • Period of deposit- Bank offers low interest rate for short tenure RDs and higher interest rate for long tenure RDs.

    Duration of Recurring Deposits with India Post Office

    You can open a Recurring Deposit account with India Post Office for a minimum tenure of 5 years which can go up to maximum tenure of 5 years.

    Premature withdrawal of RD with India Post Office

    Premature withdrawal of RD with India Post Office Bank is allowed. India Post Office Bank may charge a nominal amount of penalty as per their banking norms.
    1 Rs for every 100 rupee shall be chargedHowever, Partial withdrawal of RD account is not allowed.

    Penalty for delayed installment of RD with India Post Office

    Bank may give you grace of some days if you delay the payment beyond the due date. In case you do not pay your installment after due date, India Post Office Bank will charge a penalty as per their norms.
    1 Rs for every 100 rupee shall be charged

    Illustration: Mr. A opens a RD account for tenure of 1 year with periodic deposits of ₹ 5,000 per month at an interest rate of 5.80%. In this case, the maturity amount at the end of 1 year will be ₹ 61,909 and includes the collected principal and total interest earned on the principal amount during the period at ₹ 1,909. Similarly, you can calculate the interest and maturity amount for higher tenures by using RD calculator.

    FAQs

    What is the eligibility for opening an RD account?

    Indian residents and HUF (Hindu Undivided Families) can open RD account. NRIs can also open the RD account through NRO and NRE accounts.
    Banks provide RD scheme for minors as well, under the guardianship of parents to supervise their finances.

    What is the general tenure/duration of India Post Office Recurring Deposits?

    India Post Office RD can be opened for minimum 5 years to maximum tenure of 5 years.

    Is premature withdrawal allowed in RD accounts?

    The amount can only be withdrawn on maturity. In case of emergency you can break your RD before maturity, but after that your account will be closed. Banks may deduct 1 or 2 percent penalty from the interest accrued on your RD amount for the period for which the amount was with the bank.In India Post Office, 1 Rs for every 100 rupee shall be charged.
    The minimum lock in period is 3 months and if the depositor request a premature withdrawal before that, he earns zero interest and only the principal amount will be refunded to him. Apart from cancelled interest, any incentives offered are also withdrawn.

    Is partial withdrawal of RD accounts allowed by India Post Office?

    Partial withdrawal of recurring deposit is not allowed by India Post Office. However, some banks offer the facility to obtain Loan or Overdraft by keeping your RD as collateral. On the other hand, premature withdrawals are allowed by post offices if you have an RD account with them for at least a year. The withdrawn amount is considered a loan, which has to be paid in lump sum.
    Premature Closure is allowed, but with some penalty.

    What exactly happens on maturity of RD account?

    On maturity of your RD account, you can ask the bank to transfer the principal amount and the accumulated interest component directly into your linked savings account. You can also invest your RD amount in fixed deposits after maturity.

    Is nomination facility available in India Post Office RD account?

    Nomination facility is available in India Post Office recurring deposits. Whether you open it in single name or joint name, only one nominee per account is permissible. You should ensure that the nomination is followed as per RBI rules. You can change the nominee through declaration in appropriate form.

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