Post Office Recurring Deposit: All You Need To Know

A Post Office Recurring Deposit account allows you to deposit a fixed amount every month to earn interest income instead of a large deposit in one go, as in fixed deposits. It benefits those with limited cash who want to make monthly deposits by cash or cheque. The minimum deposit is Rs 100. Subsequent deposits can be made until the last working day of the month.   In the case of a default, the depositor must pay the defaulted amount, a fee, and the current month’s deposit. The account will be discontinued if there are four consecutive defaults, although the depositor can revive it after two months. Alternatively, the account holder can extend the maturity period by as many months as the number of defaults, provided they deposit the defaulted amount during the extended period. The Post Office Recurring Deposit account also allows advance deposits. In that case, the depositor will get a rebate of Rs 10 for advance deposits of six months and Rs 40 for 12 months. The advance deposits can be made at the time of opening or any time after that. Also Read: Three Wearable Devices To Improve Super Seniors’ Quality Of Life

Loan Facility

The depositor can also avail of a loan facility of up to 50 per cent of the account balance after 12 instalments and a year of account opening. They can repay the loan in lump-sum or monthly instalments. They will also have to pay interest on the loan amount until repayment. If the loan repayment continues up to maturity, the post office will deduct the loan amount and the interest from the maturity value. The depositor can take the loan by submitting an application and the passbook to the concerned post office.

Premature Exit

After three years from the opening date, the account can be closed by sending the required application form to the post office. If the account is closed early, even by one day, the Post Office Savings Account interest rate will be applied. Furthermore, no early account closure will be allowed until the advance deposits have been made.

Maturity Benefits

The account matures in five years or 60 monthly deposits. It can be extended by five years, and the applicable interest rate will apply during the extension period. The extended account can be closed at any time. If the account completes the extension period, the RD interest rate will apply. If it is closed less than a year after opting for an extension, the PO Savings Account rate will apply. Also, the depositor can retain the account for up to five years without depositing. Also Read: Is Contribution To Voluntary Provident Fund (VPF) Taxable?

In Case Of Death

The policy allows nominees to claim the funds in the RD account upon the account holder's death, provided the claim is sanctioned. The nominees or the legal heirs can also continue the Post Office Recurring Deposit account until maturity.