Post offices provide far more services than just handling mail. With their extensive presence throughout the country, post offices touch countless lives daily. Beyond their core postal functions, Indian post offices serve as financial institutions, accepting deposits, offering insurance services, and even engaging in some retail activities.
One of the essential services post offices provide is accepting term deposits – both fixed and recurring. These deposits help people save and invest their earnings. Among the most attractive options is the Post Office Recurring Deposit Scheme, particularly the 5-year RD.
Similar Post Office RD, Fixed deposit also offer a secure way to grow your savings. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.
5-year RD in post office
Post office RDs are also called National Savings Recurring Deposits. Currently, As of May 2024, the rate of interest on the 5-year RD in the post office is 6.7% per annum. The recurring deposit is an attractive savings and investment option because it enables you to save every month and earn decent interest on it. The interest is compounded quarterly for five years until the maturity period. Thus, while there may be several types of recurring deposit, a post office RD can be an ideal choice for salaried individuals.
You can also consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.85% p.a.
Features of post office RDs
- Tenure: Post office RDs have a 5 year tenure and can be easily withdrawn upon maturity. A premature closure facility is also available, and the deposit account can be closed after three years.
- Minimum monthly deposit: This is one of the best features of post office RD. These RDs only require a minimum monthly deposit of Rs. 100 to continue the deposit and keep the account operational.
- Advanced deposits: You have the option of making advanced deposits to your RD at all times, be it while opening the account or any time later. Besides this, advanced deposits also carry rebates that can be availed. On a denomination of Rs. 100, you get a rebate of Rs. 10 for 6 months and Rs. 40 for a 12-month advanced deposit.
- Deposit limit: There is no upper limit on how much money you can deposit in your post office RD monthly. The only guideline to be followed is that the deposits should be in multiples of Rs. 10.
- Mode of deposits: Deposits into post office RD can be easily made through cash or cheque. In the case of cheque deposits, you have to ensure that the deposit date should match the cheque clearance date.
- Account transfers: Post office RD accounts are easily transferable when you want to switch your account from one post office to another.
- Joint holding: Post office RDs can be held solely by an individual or jointly by up to 3 persons.
- Penalties on missed deposits: If you are unable to make deposits to your RD by the prescribed day of the month, a default fee will be charged to the account. For a Rs. 100 denomination account, a penalty of Rs. 1 is charged every month if instalments are defaulted. For defaults in accounts with higher denominations, a proportionate penalty is levied.
- Loan facility: After you have complied with 12 subsequent deposits in your post office RD account, you can leverage the loan facility. A loan of up to 50% of the RD credit account balance can be secured if you have continued the account for a year.
Eligibility for a 5-year RD in post office
The following are eligible for opening an RD at a post office:
- Indian citizens aged 18 and above
- Parents/guardians opening an account for a minor
- Minors over 10 years old (account in their own name)
Documents required
To open a 5-year RD in post office, you need the following documentation:
- Completed post office RD application form
- Recent passport-sized photographs
- KYC documents (for identity and address proof):
- Aadhaar card
- Passport
- PAN card
- Ration card
- Voter ID
- Driving license
- Nominee information
According to recent updates, having an Aadhaar number and a PAN card is now mandatory for opening a 5-year RD in a post office. The directive has been issued by the Ministry of Finance.
Also read: Learn how to open a recurring deposit account and start saving today.
Conclusion
Post Office 5-year Recurring Deposits provide a reliable path to achieving your financial goals. Their safety, predictable returns, and flexibility make them a smart choice for a range of savers. If you are seeking a low-risk investment with the potential for steady growth, a Post Office RD can be a good choice.
Calculate your expected investment returns with the help of our investment calculators
Investment Calculator |
||||
