An RD account can help people in financing any form of emergencies. The ease of use and flexibility have turned it into a favorite savings tool, with both the banks and post offices that offer RD. Most of the customers of the Post office RD accounts belong to rural or semi-urban areas, where a large mass of the population prefers post offices compared to banks. The post office provides a healthy profit on the maturity of RD. The interest rate applicable on post office RD accounts are revised periodically and the current interest rate applicable on the RD accounts is 6.9% per annum. The interest rate is compounded on a quarterly basis which implies that the sum of money invested multiples by the time it reached maturity.
Most investors of the Post Office RD scheme have the motive of meeting unforeseeable emergencies in coming years. For individuals who wish to open a POst office RD account must ensure that their account is active for at least a 5 years. This implies that the minimum deposit tenure for post office RD accounts is years. Individuals who wish to continue their Rd after the period is over can do so by extending the deposit term by 5 more years, making the maximum tenure for opening a post office Rd account to be 10 years. The interest rate on such deposits is also compounded on a quarterly basis.
With the post office RD accounts, the minimum deposit amount is kept low ensuring that millions of rural and semi-urban customers can benefit from the RD scheme.
|Minimum Deposit||Rs.10 per month|
|Maximum Deposit||No upper limit|
Individuals can increase their deposit amount in the multiples of 5, ensuring that they can invest whatever amount is feasible.
For keeping an RD account active with the Post Office, an individual is required to make 60 deposits before the deposit term completes. The first deposit is made when the account is opened and the subsequent monthly deposits must be made on the same date every month.
If an individual opens an RD account within the 1st and 15th of the month, then they are expected to deposit before 15th of each month for the next 5 years. Deposits can be made only in the form of Demand Draft, Pay Order or Cheque
I the account holder is unable to make the payment on due date, a penalty is levied on the account holder depending on the rules and regulations of the post office RD scheme. Currently, a maximum number of 4 defaults are allowed after which the account is discontinued. Discontinued accounts can be revived within 2 months after the 5th deposit default. A penalty of 5 paise is charged on every 5 rupees that are supposed to be deposited in the account. To revive the account, the account owner must pay the fine along with the missed deposit amount.
To incentivize people who deposit money in advance, the post office provides tax rebate on advance deposits. These rebates are very beneficial for people with limited resources. The table highlights the rebate options available for a Post Office RD account holder
|Number of Advance Deposits||Quantum of Rebate|
|More than 5, lesser than 11||1 rupee for every Rs.10 deposited|
|More than 11||Rs.4 for every Rs.10 deposited – for 12 deposits Rs.1 for every Rs.10 deposited after 12 deposits|