National Savings Recurring Deposit Account

• The Post Office offers a 5.80% p.a. cumulative quarterly interest rate on RD
• A post office RD has a 5-year term
• A monthly deposit of Rs. 100 is required to start this RD account
• A rebate is available for early deposits of at least 6 months
• There is no upper limit for investment, but it must be in multiples of Rs. 10
• A Post Office RD account can be moved from one post office to another
• Two people can open a joint account
• The penalty for failing to make a deposit is 5 paise for every Rs. 5 missed

Who is eligible to open this account?

Any number of RD accounts can be opened by an individual. This account can be opened by –

• a single adult
• joint account (up to 3 adults) (Joint A or Joint B)
• a guardian on behalf of the minor
• a guardian on behalf of a person of unsound mind
• a minor above 10 years in his own name

What are the modes of deposit into the account?

• There are different modes of deposit available to deposit the investment amount into the account. You can use one of the below –
• Cash or cheque can be used to open an account, and the date of deposit in the case of a cheque is the date of clearing of the cheque.
• The minimum amount for a monthly deposit is Rs. 100 and amounts greater than Rs. 100 must be in multiples of Rs. 10.
• Subsequent deposits may be made up until the 15th of the month if the account is opened before the 15th of the calendar month.
• If the account is opened between the 16th and the last working day of the calendar month, subsequent deposits may be made up until the last working day of the month.

What happens when the investment matures?

• Your investment will mature 5 years (60 monthly deposits) from the date of opening.
• Accounts may be renewed for another 5 years by submitting an application to the relevant Post Office.
• The interest rate applicable during the extension period will be the same as the interest rate at which the account was originally opened.
• The extended account can be closed at any time during the extension period. The RD interest rate will be valid for the years completed, and the PO Savings Account interest rate will be applicable for investment periods shorter than a year.
• Without a deposit, an RD account can be held for up to 5 years from the date of maturity.

Maturity proceeds in case of death of the account holder

In case of death of the account holder during the term of the investment, the legal nominee or beneficiary can claim the maturity amount. After the claim is approved, the nominee/legal heirs may continue the RD account until maturity by sending an application to the relevant Post Office.

What happens in case I default on the monthly payments?

• If you do not make the required deposit on the specified day for a month, a default is levied on each defaulted month, with a default of Rs.1 charged for every Rs. 100 denomination accounts (proportionate sum charged for all denominations).
• If there is a monthly default on every RD account, the depositor must first pay the defaulted monthly deposit with the default charge, followed by the current month deposit.
• After four regular defaults, the account is discontinued and can be reinstated within two months of the fourth default; however, if the account is not revived within this time, no more deposits can be made and the account is discontinued.
• If there are no more than four defaults in monthly deposits, the account holder may, at his discretion, increase the account's maturity period by the number of defaults and deposit the defaulted instalments during the extended period.

Can I close the RD Account prematurely?

• By sending a specified application form to the concerned Post Office after three years from the date of account opening, an RD account may be closed prematurely.
• If the account is closed early, or one day before expiration, the interest rate on the PO Savings Account would apply.
• It is not permitted to close an account until the time during which advance deposits have been made has expired.

Can I take a loan on my National Savings Recurring Deposit Account?

Yes, you can take a loan on your RD Account. Here is how:

• After paying 12 instalments and keeping the account open for a year, the depositor is eligible for a loan of up to 50% of the account's balance credit.
• The loan may be paid back in one lump sum or in annual instalments.
• The interest rate on the loan will be 2% plus the RD interest rate on the RD portfolio.
• From the date of withdrawal until the date of redemption, interest will be calculated.
• If the debt is not repaid before the maturity date, the loan amount plus interest will be deducted from the RD account's maturity value.

About Savings Schemes at Post Offices

The Indian Postal System is the backbone of mails and parcels across the country. It was one of the most widely used public service system a few decades ago. Leveraging this facility, the government introduced various savings schemes to enable the underprivileged section of the society to save systematically.

Post Office Savings Bank Account, Post Office Term Deposits, Post Office Recurring Deposits, National Savings Certificate (NSC), Kisan Vikas Pata (KVP), and the latest Sukanya Samriddhi Yojana (SSY), are some of the popular savings schemes offered through India Post Offices.

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