- A recurring deposit is a type of term-deposit. Unlike a fixed deposit account, in which a lump-sum amount is locked in for a defined period against a fixed return, a recurring deposit account allows the investor to park a fixed amount of funds at regular intervals; for instance, every month.
- A post office recurring deposit (RD) account can be opened by cash as well as cheque. In case of cheque, the date of deposit is the date of presentation of cheque, according to India Post.
- Any number of RD accounts can be opened in a post office.
- Account can also be opened in the name of a minor. A minor of 10 years and above age can open and operate the account.
- The maturity period of post office RD account is 5 years. However, it can be continued for another five years on a year-to-year basis.
- It can be opened with a minimum of Rs 10 per month or any amount in multiples of Rs 5.
- There is no maximum limit on investment in post office recurring deposit (RD).
- Subsequent deposit can be made up to 15th day of next month if the account is opened up to 15th of a calendar month, and up to last working day of next month if account is opened between 16th day and last working day of a calendar month.
- One withdrawal up to 50 per cent of the balance is allowed after one year. However, it should be repaid in one lump-sum along with interest at the prescribed rate at any time during the currency of the account.
- The monthly deposits should be credited on any day of the month. Non-payment of a monthly instalment leads to a default. A default fee of five paise is charged for every five rupees. If in any RD account, there is monthly default amount, the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit, according to India Post.
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