India Post, which operates a network of more than 1.5 lakh post offices across the country, offers nine types of government-sponsored savings schemes in designated branches. These include a five-year recurring deposit account (RD). At present, the interest rates applicable to all post office saving schemes are reviewed on a quarterly basis. For the current quarter, which ends on September 30, 2019, investment in post office recurring deposit fetches a return of 7.20 per cent, according to India Post's website, indiapost.gov.in. In the current quarter, the government reduced the interest rates applicable to small savings schemes by 10 basis points.
Here's everything you need to know to invest in the post office recurring deposit (RD) scheme:
Post office recurring deposit (RD) account opening rules
For opening a five-year recurring deposit account, a minimum investment of Rs 10 per month is required, according to the India Post website. Monthly deposits can be made in multiples of Rs 5. A depositor can have more than one account in his/her own name, or jointly with another person. 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.
The amounts deposited are repayable in lump sum at the end of the period of five years from the date on which the first deposit was made along with interest as prescribed from time to time.
Premature withdrawal rules of Post office recurring deposit (RD)
One withdrawal up to 50 per cent of the balance is allowed after one year. However, it should be repaid in lump-sum along with interest at the prescribed rate at any time during the currency of the account, according to India Post.
Late payment charges for Post office recurring deposit (RD)
The monthly deposits should be credited on any day of the month. Non-payment of a monthly installment 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.
A maximum of four defaults are allowed. After this the account becomes discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made, according to India Post's website. This is applicable for both Core Banking Solution (CBS) and non-CBS post offices.