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Post office Schemes

Post Office Recurring Deposits

Post Office Schemes, Money and FinanceThe post office Recurring Deposit Account is offered by the Department of Post, Government of India that facilitates investors to deposit a fixed amount of money every month in the account in order to get a lump sum after five years. It is a systematic way of long term savings and one of the best ways to invest for the lower income group. The account can be opened by a person or by a person jointly with another person. Also a minor can open a Recurring Deposit Account with the post office under the aegis of a guardian. The post office RD account has to be opened for a period of five years. An account holder can seek to renew the same after maturity of the previous term.

Features of Post office Schemes

Deposit Amount: Limitation

Min Amount        Rs. 10/-

Max Amount       No Limit

Denominations   Rs. 5/-

Deposits to be made: Availability

All through the year.

Mode of Operation

  • Single
  • Joint (Two or more)
  • Minor with parent/guardian

Tenure Investment

P. O. Recurring Deposit has an investment period of 5 years.


Facility is there at the time of opening the account or anytime during the tenure of the account.

Premature Encashment

Is permitted if deposit is more than one year old. The interest rate applicable will be that which is prevailing at that time.


The certificate is to be discharged at the back.

Loss of Passbook

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.

Tax Benefits

Tax benefits can be availed under section 80L. No Tax benefits are provided under section 88.

Tips for Investing

A P. O. Recurring Deposit is a novel way of saving a fixed sum every month for a particular period which will fetch the investor a large sum after 5 years.


Payment of Installments

Repayments, Money and FinanceDeposit into the RD account is to be made for a period of 5 years in 60 installments. The first installment is deposited at the time of opening of the account . The subsequent installments are to be made in every subsequent month before the end of the calendar month and shall be equal to the first deposit. In case a deposit is made by cheque, pay order or demand draft, the date of its presentation to the post office is deemed as the date of deposit. In case of five defaults in monthly installments, the depositor may, at his option, extend the maturity period of the account by as many months as the number of defaults and deposit the defaulted installment during the extended period. If there are more than the five defaults, the account shall be treated as discontinued. Revival of the account shall be permitted only within a period of six months from the month of sixth default. Interest at the rate of the ten paise for every five rupees of a defaulted installment for each month of default shall also be paid alongwith such deposit and an account in which defaulted installments are so deposited, shall not be treated as discontinued.

Repayment & Withdrawal

In the case of an account in which all monthly deposits have been made during its maturity period or maturity period as extended, the depositor shall get back the entire amount with interest. Where an account has discontinued or where the defaults in monthly deposit in an account have not been rectified during its maturity period or maturity period as extended, the depositor shall be entitled, on the expiry of such period, to receive an amount, inclusive of interest, which shall be in the same proportion to the amount specified in the schedule, as the number of monthly deposits made in the account bears to sixty.

Where an account is still in current, withdrawal is allowed if the account has accumulated fifty per cent of the deposits after the account has been in operation for at least one year and twelve monthly deposits have been made in the account. In the case of repayment in one lump sum, interest at the rate specified shall be calculated on the amount of withdrawal for the full calendar months from the month of withdrawal to the month of repayment. Where, for any reason, the amount of withdrawal or a part thereof has not been re-paid, or the interest thereon has not been paid, by the depositor before the closure of the account, the outstanding amount due from him in the account shall be recovered from the amount payable to him or to his nominee or legal heir, as the case may be, on the closure of the account.


The depositor of an account may prematurely close the account after one year from the date of opening of the account provided that interest at the rate applicable then to the post office savings account shall be payable on such premature closure of an account.

Returns on Post office Schemes

Monthly Investment

Total Investment(60months)

Money returned on Maturity (after 60 months)


























Advantages of a Postal RD

Advantages, Money and FinanceThe 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.



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