The Post Office Recurring Deposit (RD) Scheme is a trusted and secure savings plan offered by India Post. It allows individuals to invest small amounts every month and accumulate a lump sum with interest over time. If you’re looking for a low-risk investment option with guaranteed returns, this scheme is worth considering.
This article will break down everything you need to know about the Post Office RD Scheme, including interest rates, maturity amounts, benefits, and how you can get started. Whether you’re saving for the future or looking for a stable investment, this guide will help you make an informed decision.
Post Office RD Scheme
| Feature | Details |
|---|---|
| Interest Rate | 6.70% per annum (compounded quarterly) |
| Minimum Deposit | ₹100 per month |
| Maximum Deposit | No upper limit (in multiples of ₹100) |
| Tenure | 5 years (60 months) |
| Loan Facility | Up to 50% of the balance after 1 year |
| Premature Closure | Allowed after 3 years (reduced interest rate applies) |
| Risk Factor | Very low (backed by the government) |
| Official Website | India Post |
The Post Office RD Scheme is an excellent savings option for those looking for safe, guaranteed returns with small monthly investments. With an interest rate of 6.70% per annum, compounded quarterly, this scheme ensures steady wealth accumulation over time.
Understanding the Post Office RD Scheme
1. What is the Post Office RD Scheme?
The Post Office RD Scheme is a savings plan where you can deposit a fixed amount every month for 5 years and earn compound interest on it. The scheme is designed for small investors who want safe and steady growth of their savings.
The biggest advantage? Compounded quarterly interest ensures better returns compared to a simple savings account.
2. Interest Rate and How it Works
As of March 2025, the interest rate for the Post Office RD is 6.70% per annum, compounded every quarter. This means your investment grows faster because interest is calculated on both principal and previously earned interest.
For example, if you deposit ₹1,000 per month, your maturity amount after 5 years will be approximately ₹71,366. (Full breakdown in the table below.)
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How Much Will You Get on Depositing ₹1000, ₹2000, ₹5000, and ₹10,000?
| Monthly Deposit | Total Investment (₹) | Interest Earned (₹) | Maturity Amount (₹) |
|---|---|---|---|
| ₹1,000 | ₹60,000 | ₹11,366 | ₹71,366 |
| ₹2,000 | ₹1,20,000 | ₹22,732 | ₹1,42,732 |
| ₹5,000 | ₹3,00,000 | ₹56,829 | ₹3,56,829 |
| ₹10,000 | ₹6,00,000 | ₹1,13,658 | ₹7,13,658 |
Benefits of Investing in Post Office RD
1. Safe and Secure Investment
The Post Office RD is government-backed, making it one of the safest investment options in India.
2. Guaranteed Returns
Unlike market-linked investments, the Post Office RD provides fixed returns, making it ideal for risk-averse investors.
3. Flexible Investment
- You can start with as little as ₹100 per month.
- There is no maximum limit on deposits (must be in multiples of ₹100).
4. Compounded Quarterly Interest
- Your money grows faster because interest is added every three months.
5. Loan Facility
- You can take a loan up to 50% of your balance after 12 months.
6. Premature Withdrawal
- You can withdraw early after 3 years, though at a lower interest rate.
How to Open a Post Office RD Account?
Step 1: Visit the Nearest Post Office
- Find your nearest India Post branch.
Step 2: Fill Out the Application Form
- Submit KYC documents like Aadhaar, PAN, and proof of address.
Step 3: Choose Your Deposit Amount
- Minimum: ₹100
- Maximum: No limit
Step 4: Deposit Your First Installment
- Pay by cash, cheque, or online transfer.
Step 5: Get Your Passbook
- You will receive a passbook to track your deposits and interest earned.
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Post Office RD Scheme FAQs
1. Can I increase my RD installment amount?
No, the deposit amount must remain the same every month.
2. What happens if I miss a deposit?
You will be charged a late fee of ₹1 for every ₹100 per month.
3. Is RD better than FD?
- RD is good for regular savings.
- FD is better for lump sum investments.
4. Can I open an RD online?
Yes, if you have internet banking with India Post Payments Bank (IPPB).
5. Is Post Office RD taxable?
- Interest earned is taxable under Income Tax Act.
- No TDS is deducted, but you must declare it in your tax return.
