What is Post Office Recurring Deposit
A Post Office Recurring Deposit (PORD) is a savings scheme offered by India Post, the government agency that provides postal services in India. With this scheme, individuals can deposit a fixed amount of money regularly, for a predetermined period. The maturity period for a Post Office RD is 5 years. The interest rates are set by the government and are compounded quarterly. At maturity, the deposited amount along with the accumulated interest is returned to the account holder. This scheme provides a systematic way for individuals to save and earn interest.
Post Office Recurring Deposit interest rates
As of August 2024, interest rate on Post Office Recurring Deposit is 6.7 % per annum, which is compounded quarterly.
Features of the Post Office Recurring Deposit scheme
Here are the key features of the Post Office Recurring Deposit scheme:
- Minimum and maximum deposits: The minimum installment is Rs. 100, with higher amounts accepted in multiples of Rs. 10. There is no upper limit on the deposit amount.
- Deposit methods: Deposits can be made in cash or by cheque. For cheque payments, the deposit date is considered as the date the cheque clears.
- Nomination: The scheme provides a nomination facility.
- Advance payment rebate: A rebate is offered for advance payments of six or more installments. For a Rs. 100 denomination, the rebate is Rs. 10 for six months and Rs. 40 for twelve months.
- Account operation: Accounts can be operated individually or jointly (up to three adults).
- Interest calculation: Interest is compounded quarterly on the RD account.
- Default penalty: A fee is charged for missed deposits. For a Rs. 100 denomination account, a default fee of Rs. 1 per missed month is applied (proportional to other denominations).
- Premature closure: Premature closure of the account is permitted after three years.
- Transferability: The account can be easily transferred from one post office to another.
- Loan facility: Loans up to 50% of the balance credit are available after 12 installments have been deposited and the account has been active for one year.
Eligibility criteria of Post Office Recurring Deposit scheme
- For an individual (18 years or older).
- For joint account (up to 3 adults).
- Guardian for a minor.
- A guardian for a person with a mental disability.
- A minor aged 10 or above in their own name.
Documents required
To open a recurring deposit account with India Post, you need to provide the following documents:
- A completed Application Form for Opening an Account.
- KYC documents for identity and address verification.
- Accepted identity and address proofs include a driving license, passport, voter ID, a job card issued by NREGA and signed by a State Government officer, or a letter from the National Population Register detailing your name and address.
How to open Post Office Recurring Deposit Account (PORD)
1. Online process:
The India Post Payments Bank (IPPB) app is launched to make post office online banking easy. You can open a bank account on the IPPB app & manage your Recurring Deposit (RD) account. Here are the steps to open a RD account online:
- Install the IPPB app on your device.
- Provide necessary details, such as mobile number and PAN number. Verify your mobile number with OTP and open a post office savings account.
- Enter your Aadhaar card number and verify it via OTP.
- Fill out the online application form, covering personal information, communication address, account details, and nominee details.
- After submitting the form, your post office savings account will be activated.
- You will receive you customer ID and account number.
- Use your customer ID, date of birth and account number to generate a login PIN.
- Go to "Send Money" option under the menu tab. Click on "DOP Products" to deposit money.
2. Offline process:
- Visit your nearest post office.
- Ask for an RD application form.
- Fill in all the details, submit the required documents.
- Submit the RD form along with the initial deposit amount to open your PORD account.
Maturity period of Post Office Recurring Deposit scheme
- The RD account has a tenure of 5 years from the opening date.
- The tenure can be extended for 5 more years by submitting an application at the respective Post Office. The interest rate during the extension will be the same as the rate at which the account was initially opened.
- The extended account can be closed at any point during the extension period.
- The RD account can be retained for up to 5 years from the maturity date without further deposits.
What will happen if you default on your PORD Account?
- For each month of default, a fee of Rs. 1 is charged for Rs. 100 (proportional for other denominations).
- In case of continuous monthly defaults in an RD account, the depositor must first pay the defaulted monthly deposit with a default fee before paying the current month's deposit.
- After 4 regular defaults, the account will be discontinued, and can be revived within two months. If not, no further deposit is allowed and the account remains discontinued.
- If there are up to 4 defaults in monthly deposit timeline, the account holder can extend the maturity period by the number of defaults, depositing the overdue instalments during the extended period.
Also read: Post Office Saving Schemes
Premature closure of Post Office Recurring Deposit account
- Premature closure of the RD Account is allowed after 3 years from the date of account opening by submitting the prescribed application form at the respective Post Office.
- If the account is closed prematurely even one day before maturity, the Post Office (PO) savings account interest rate will apply.
- Premature closure is not allowed until the period for which the advance deposits have been made.
Repayment on the death of an Account Holder
- In the event of the account holder's demise, the nominee/claimant can submit a claim at the relevant Post Office to receive the eligible balance of the RD account.
- Upon approval of the claim, the nominee/legal heirs have the option to continue the RD account until maturity by submitting an application at the respective Post Office.
Also read: What is Post Office Monthly Income Scheme
Bajaj Finance Fixed Deposit vs Post Office Recurring Deposit scheme
Criteria
|
Bajaj Finance Fixed Deposit
|
Post Office Recurring Deposit Scheme
|
Interest Rate
|
Up to 8.85% p.a.
|
6.7% p.a. (as of August 2024)
|
Minimum Investment
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Rs. 15,000
|
Rs. 100 per month
|
Maximum Investment
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Rs. 5 crore
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No maximum limit
|
Tenure
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12 months to 60 months
|
5 years
|
Premature Withdrawal
|
Available
|
Available
|
Conclusion
Post Office Recurring Deposit is a simple savings scheme by India Post. Whether through online or offline methods, opening an account is easy. It is a reliable way to save money. With clear rules on defaults and premature closures, this scheme meets financial needs of people with diverse incomes, offering simplicity and flexibility.
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