Post Office Recurring Deposit Scheme 2023: Interest rates, returns, and more

As individuals strive to secure their financial future, investment schemes such as recurring deposits (RDs) have gained popularity due to their systematic approach and guaranteed returns. The Post Office in India offers a Recurring Deposit Scheme that provides a reliable and accessible investment option for individuals. This article delves into the intricacies of the Recurring Deposit Scheme offered by the Post Office in 2023, discussing its features, benefits, interest rates, eligibility criteria, and other essential details.

Eligibility for Opening Recurring Deposit scheme with the Post office

To be eligible for opening a Recurring Deposit (RD) scheme with the Post Office, individuals need to meet the following criteria:

1. Age: Any individual who is at least 10 years old can open an RD account. Minors can also open an account under the guardianship of a parent or legal guardian.
2. Residential Status: The RD scheme is available for Indian residents as well as Hindu Undivided Families (HUFs). Non-resident Indians (NRIs) are not eligible to open an RD account with the Post Office.
3. Documentation: Applicants are required to provide the following documents:
   a. Identity Proof: Valid identity proof such as an Aadhaar card, PAN card, passport, voter ID card, or driving license.
   b. Address Proof: Documents like an Aadhaar card, passport, utility bills (electricity bill, telephone bill, etc.), bank statement, or ration card can be submitted as address proof.
   c. Photographs: Recent passport-sized photographs of the account holder(s) will be required. It is important to note that the specific documents required may vary, and it is advisable to check with the Post Office or their official website for the most up-to-date list of required documents.

Highlighted Key-features of the Recurring Deposit Scheme

Maximum and Minimum Investments Limits in Recurring Deposit

Apart from meeting the eligibility criteria, individuals will also need to comply with the deposit limits and other terms and conditions set by the Post Office for the RD scheme. The minimum monthly deposit required to open an RD account is Rs. 100, with subsequent multiples of Rs. 10. There is no maximum limit on the amount that can be deposited.

Modes of Deposit

At the time of opening of an account, you can deposit by cheque or cash. Installments can also be deposited by the same manner

Due Date of Monthly Deposit

If an account is opened between 1st to 15th, the due date of the monthly deposit will be the 15th of that month. 

If an account is opened between the 16th and to last date of the month, the due date of the monthly deposit will be the Last date of that month.

Tenure of RD scheme

Tenure of RD schemes is 5 years (60 Months) from the date of opening of an account, Installment wise 60 installments have to make

Extension of RD scheme

Extension of deposit tenure in a Post Office RD account is known as “Continuation of Account.” Here are some important points to consider:

1. Eligibility: The option to extend the RD account is available to account holders who have completed the initial tenure of 5 years.
2. Renewal Period: The extension of the RD account can be done in blocks of 5 years, subject to a maximum tenure of 10 years. This means that account holders can choose to renew their RD account for an additional 5-year period or multiple periods thereof.
3. Procedure: To extend the deposit tenure, account holders need to approach the Post Office branch where the RD account is held. They must fill out the necessary forms and provide relevant documents as per the requirements of the Post Office.
4. Interest Rates: The interest rates for the extended period may be different from the rates applicable during the initial tenure. It is advisable to check with the Post Office or refer to their official website to determine the prevailing interest rates for the extended RD period.
5. Continued Deposits: During the extended tenure, account holders are required to continue making monthly deposits as per the agreed terms. The amount and frequency of deposits remain the same as determined during the initial tenure.
6. Maturity and Withdrawals: At the end of the extended tenure, the RD account will mature, and the account holder can withdraw the accumulated amount along with the interest earned.

Premature Closure

Premature closure of a Recurring Deposit (RD) account in the Post Office is possible, but it comes with certain conditions and penalties. Here are the important points to consider regarding premature closure of an RD account:

1. Lock-in Period: The lock-in period for an RD account in the Post Office is 3 months. This means that the account cannot be closed before the completion of 3 months from the date of opening.
2. Premature Closure Penalty: If an RD account is closed before the completion of the lock-in period, a penalty is imposed. The penalty amount varies depending on the duration of the account’s operation and is deducted from the account balance at the time of closure.
3. Penalty Charges: The penalty charges for premature closure of a Post Office RD account are as follows:
4. a. If the account is closed before 1 year: The penalty charge is equal to 2% of the deposit amount.
5. b. If the account is closed after 1 year but before maturity: The penalty charge is 1% of the deposit amount.
6. Calculation of Interest: In case of premature closure, the interest payable on the RD account is calculated at the rate applicable for a savings account. The interest is calculated from the date of account opening to the date of premature closure.
7. Procedure for Premature Closure: To close an RD account prematurely, the account holder needs to visit the Post Office branch where the account is held. They must fill out the necessary forms and provide the required documents as per the Post Office’s guidelines.

Loan Facility with RD

The Post Office Recurring Deposit (RD) scheme offers the facility of availing a loan against the RD account after completing one year in the scheme. Here are the key points to understand about taking a loan against an RD account:

1. Eligibility: To be eligible for a loan against an RD account, the account holder must have completed at least one year of regular monthly deposits.
2. Loan Amount: The loan amount that can be availed against an RD account is typically a percentage of the total deposit balance in the account. The specific loan-to-value (LTV) ratio may vary, and it is advisable to check with the Post Office for the exact loan amount available.
3. Interest Rate: The interest rate charged on the loan against an RD account is generally lower compared to other types of loans. The interest rate applicable may be set by the Post Office and can vary based on the prevailing policies at the time of availing the loan.
4. Loan Repayment: The loan against the RD account is typically repaid in monthly installments. The repayment period and installment amount may vary based on the terms and conditions set by the Post Office.
5. RD Account Status: While a loan is taken against the RD account, the account continues to earn interest on the remaining deposit balance. The interest earned is credited to the account at regular intervals.
6. Collateral: The RD account itself serves as collateral for the loan, eliminating the need for additional collateral or security.

Loan Processing Charges: The Post Office may charge a nominal processing fee for availing the loan against the RD account. The specific charges may vary, and it is advisable to inquire about them while applying for the loan.

Latest Interest Rates

Interest rates From 01.04.2023 to 30.06.2023

• 6.2​ % per annum (quarterly compounded)