A Post-Office Recurring Deposit Account (RDA) is a banking service offered by Department of post, Government of India at all post office counters in the country. The scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum after five years. The scheme, a systematic way for long term savings, is one of the best investment option for the low income groups.
Features
The minimum investment in a post-office RDA is Rs 10 and then in multiples of Rs. 5/- for a period of 5 years. There is no prescribed upper limit on your investment.
The deposit shall be paid as monthly installments and each subsequent monthly installment shall be made before the end of the calendar month and shall be equal to the first deposit. In case of default in payment, a default fee is chargeable for delayed deposit at 0.20 Paise per month of delay, for Rs.10 Denomination. After more than four defaults, the account shall be treated as discontinued in case the account is not revived within two months from the fifth default.
For Advance deposits for 6 months or 12 months, a rebate is allowed at the prescribed rate (For Rs 10 denomination:- Rs.1/- for 6 advance deposits, Rs.4/- for 12 advance deposits.
One withdrawal is allowed after one year of opening a post-office RDA on meeting certain conditions. You can withdraw up to half the balance lying to your credit at an interest charged at 15%. The withdrawal or the loan may be repaid in one lump or in equal monthly installments.
Premature closure is allowed on completion of three years from the date of opening and in such case, interest is payable as per the rate applicable for the Post Office Savings Bank Account.
After maturity of the account, it can be continued for a further period of 5 years with or without further deposits. During this extended period, the account can be closed at any time.
Returns
The post-office recurring deposits offers a fixed rate of interest, currently at 7.5 per cent per anum compounded quarterly.
| Monthly Investment | Total Investment(60months) | Money returned on Maturity (after 60 months) |
|---|---|---|
| 10 | 600 | 728.90 |
| 20 | 1200 | 1457.80 |
| 50 | 3000 | 3644.50 |
| 100 | 6000 | 7289 |
| 500 | 30000 | 36445 |
| 1000 | 60000 | 72890 |
| 1375 | 82500 | 100224 |
| 5000 | 300000 | 364450 |
Advantages
The post office offers a fixed rate of interest unlike banks which constantly change their recurring deposit interest rates depending on their demand supply position. As the post office is a department of the government of India, it is a safe investment. The principal amount in the Recurring Deposit Account is assured. Moreover Interest earned on this account is exempted from tax as per Section 80L of Income Tax Act.
How to Start Post office RDA
A post-office RDA can be opened at any post office in the country by filling up the appropriate forms. The account can be opened by an individual adult as a single person account, two adults in a joint mode, or by a guardian on behalf of the minor who has attained the age of 10 years in his own name. A pass book is issued at the time of opening the account. If there is a loss, theft or the passbook is mutilated, a duplicate is issued on a charge. The deposit can be made personally at the particular post office every month or can be made through an appointed agent, who would collect the money from you and enter the same in your passbook.
Can you explain the advance deposit option in more details? What is its benefit?
ReplyDeleteDear Anand,
ReplyDeleteI had RD account opened on 26/12/99 for Rs 1000 per month. It was continued for 10 years. I was paid only Rs. 162230 as maturity amount. Thus I was paid less than 6 per cent quarterly compounded interest. Post office claims that it is 7.5%. Since my account was opened in December 1999, I should get interest of 11.5%. Actually I got 11.5% on one RD that matured in April 2009. Could you please tell me what amount I am entitled to? Thanks a lot.
Dr Vijay Vaidya
To: Vijay Vaidhya
ReplyDeleteCheck with the bank. If the RD opening agreement says the amount entitled at maturity would be based on the prevailing interest rates then you can do nothing. Some banks do this to attract investors at the prevailing higher interest rates but when the RD matures if the market rates are lesser, they pay only the prevalent market rates. I think this is why you got lesser money than what you were entitled.
Advanced Deposit Option:
ReplyDeleteIt is an option where you can pay your next few months installments for the RD in this month and opt not to pay for the next few months.
Hi Mr. Anand,
ReplyDeletei am depositing Rs.1000 / per month in RD.If i wish to pay for 12 months in advance.what would be the rebate for that?
Hi Mr. Anand,
ReplyDeletei am depositing Rs.1000 / per month in RD.If i wish to pay for 12 months in advance.what would be the rebate for that?
Hi Mr. Anand,
ReplyDeletei am depositing Rs.1000 / per month in RD.If i wish to pay for 12 months in advance.what would be the rebate for that?
@Manoj & Anonymous,
ReplyDeleteI dont think there is any rebate for paying all your monthly payments up front. But, to be n the safer side, it would be best to confirm with the post office where you opened it.
Unfortunately I am currently abroad, else I would have visited my nearest post office to help you. Apologies!!!
Anand.
Dear Anand,
ReplyDeleteI have RD account opened on 22/04/2009 for Rs 5000 per month & will be matured on 22/04/2014. How much will be maturity amount also please suggest to for 10 years. What will be maturity amount if continue for 10 years.
Thanks
Ashok Chauhan
Ashok - You have not mentioned what bank you deposited or what is the rate of interest without which I cannot comment on how much you will get. Use the RD calculator below: enter your amount, rate of interest and RD Duration and you will get the maturity amount
Deletehttp://www.allbankingsolutions.com/Recurring-Deposit-Calculator-India.shtml