Post office Recurring Deposit

What is Post office Recurring Deposit Account (RDA)?

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.

Post Office Saving

In turbulent times like these, safety of the investment is of utmost priority among people. For ages we have been hearing/seeing/using the post office for sending letters, documents etc. What the current generation does not know about the post office is the fact that, it has been an investment heaven for our fathers and their fathers. Ask somebody who is in their sixties, one of the top 3 choices for investment would be the Post Office.

Since the post office is owned by the Government of India whatever money we invest in it is totally 100% safe and secure. Whats more they give us competitive rate of interest on our investment as well.

Post Office Saving Facts:

Post Office Saving is the best form of savings schemes which provide substantially higher rates of interest and pose relatively lesser risks of suffering losses. Therefore, they are widely accepted among the different sections of the Indian society and among the different age groups.

The Indian postal sector has started numerous Post Office Saving schemes like:

* Post Office Time Deposits
* Deposit Scheme for Retiring Government Employees
* Post Office Monthly Income Scheme
* Post Office Recurring Deposits
* Deposit Scheme for Retiring Employees of Public Sector Companies
* National Savings Scheme
* National Savings Certificates
* Postal Life Insurance
* Public Provident Funds
* Kisan Vikas Patra

Let us look in detail about some of the best investment options using the Post Office.

Post office time deposits:

The post office time deposits scheme fall under the category of fixed deposits and are available at all the post offices throughout India. The investors are not entitled to receive any amount towards interests on a monthly basis but receive a lump sum amount as interest when the scheme matures. The interest rate in case of these schemes is directly proportional to the tenure of the scheme. The minimum amount required to start the post office time deposits scheme is only Rs. 200 but there is no set limit for the maximum amount. The scheme allows nomination facility and the tenure of the scheme ranges from 1-5 years. The rate of interest varies according to the tenure of deposit. For example, the interest rate for the post office time deposits scheme of 1 year is 6.25% per annum, 6.50% for 2 years per annum, 7.25% for 3 years per annum, and 7.50% for 5 years per annum.

Though banks today offer a much higher rate of interest on term deposits, post office being owned by the government of India safety is 100%

Post office monthly income scheme:

The monthly income scheme also falls under the category of fixed deposits and the tenure of this scheme is 6 years. The post office has made it a rule to accept only a single deposit in an account and the monthly income schemes are available in all the post offices in India. The minimum amount required to be submitted to start this scheme is Rs. 1,000, a maximum amount of Rs. 3 lakh in case the account is held by a single individual and Rs. 6 lakh in case it is a joint account. The rate of interest has been fixed at 8% per annum and the investors are entitled to receive monthly interest payments. The investors are also entitled to a bonus amount of 10% on the total loan amount which is paid when the scheme matures. The investors have the facility to get income tax relief in accordance with Section 80L of Income Tax.

Kisan Vikas Patra:

Kisan Vikas Patra certificates are secured by the backing of the central government of India which makes it the most effective post office saving. The best thing about Kisan Vikas Patra certificates is that the deposited amount doubles itself after the completion of stipulated period and the rate of interest offered by the post offices for these certificates remain same throughout the loan period. The tenure of Kisan Vikas Patra certificates is 8 years and 7 months. The face value of Kisan Vikas Patra certificates range from Rs. 100 to Rs. 50,000.

Post office recurring deposit:

The tenure of the post office recurring deposit accounts is 5 years which comprise of 60 equal monthly deposits of at least Rs.10 towards each installment. Default of at the most 4 payments are considered and forgiven by charging a minimal default fee. As the post office recurring deposit scheme matures, the investor of Rs. 10 denomination account is paid a sum of Rs. 728.90.

Public provident funds:

The public provident funds can be started with a sum of Rs. 500 and can extend to Rs. 70,000 and the account can be shifted from a post office to another post office or from a post office to a bank or from one bank to another. The interest change varies every year and is entitled to income tax rebates under Section 88 of Income Tax Act.

Happy Investing..