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Post Office Recurring Deposit Scheme Interest Rates 2020 Research Team | Posted On Tuesday, February 25,2020, 06:00 PM

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Post Office Recurring Deposit Scheme Interest Rates 2020



Post office Recurring Deposit account is a savings account offered by the Indian Post Office. It allows investors to save money every month for a pre-specified time period thus allowing investors to save while incurring interest on the deposited amount.

RD account can be opened and operated easily. These accounts come with a host of benefits like premature withdrawal of deposits, interest payment, minimum deposit amount, nomination facility etc

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Post Office Recurring Deposit Scheme Interest Rates 2020:

The 5-year post office recurring deposits are one of the most popular investment instruments. The scheme is popular among the masses not only due to the simple rules and regulations but also due to the high-interest rate and the minimum investment amount. The scheme enables investors to earn a decent amount of profit on maturity while saving money.

See Also: Post Office Recurring Deposit Account

The rate of interest provided by the scheme is revised periodically. Currently, the post office RD is earning an interest 7.2% per annum. The compounding of interest every quarter enables you to earn a higher amount of returns on maturity. Compounding of money allows the principal to grow by adding the accrued principle and thus earning interest on the revised principal amount.

RD interest rates

7.2% per annum (quarterly compounding)


5 years

Missed deposit penalty

Re. 1 for every 100 rupees.

The post office RD can be opened by investing a minimum monthly amount of Rs. 10 and can thus be availed by all income groups. People often prefer using a recurring deposit account to build up an attractive corpus through regular investment. Thus you have to pay a fixed amount over the investment horizon and withdraw the money only on maturity. The account holders can deposit money in multiples of 5.

See Also: Recurring Deposits - How to Reap Maximum Benefit from Them

Since there is no specified upper limit you can use the Post office recurring deposit account for a number of purposes. You can use it to save money for your big-ticket purchases, can accumulate your home loan down payment, save for retirement and save money for emergencies.  

Quantum of Deposits:

A recurring deposit scheme is immensely popular among all categories of individuals. It offers individuals an opportunity to save for the future through monthly payments. The minimum deposit amount is kept low, to ensure people belonging to the lower middle class and rural areas can afford to save money in RD accounts. RD accounts also enable children to inculcate the habit of saving money. Thus minors who are above 10 years of age can open the post office Recurring deposit accounts. So the minimum deposit limit is kept low to make it accessible to various age group and income groups. The table below shows the quantum of deposits permitted in post-office RD accounts.

Maximum deposit amount

No upper limit

Minimum deposit amount

Rs. 100 per month

Deposit Dates:

The depositor is required to make a total of 60 deposits during the investment horizon. The first deposit is made on the day the account is opened and the consequent deposits are made on or before the due date. The due date is fixed based on the date on which the account is opened.

Thus the depositor who opens the account between 1st and 15th of a particular month is expected to make monthly deposits before the 15th of the next month. Accounts opened after 15th will be due between 16th and the last day of the month.

See Also: How to Save Money with PAYTM Recurring Deposit and Flexible RD?

Penalties on PORD Account:

Since Post office RD accounts cannot be operated online, it is imperative that depositors may fail to make regular payments. There can be instances when the account holder is unable to deposit the money on or before the due date. Thus the PORD account allows a maximum of 4 defaults post which the account becomes discontinued. The account can be revived within 2 months after the 5th default.

The depositor will also have to pay a penalty for missed payments. As per the rules, the depositor will be penalised with Re. 1 for every Rs. 100. The fine must be submitted along with the missed monthly deposit amount to keep the account alive.

See Also: Fixed Deposit vs Recurring Deposit: Which is the Better Option?

Rebate on PORD Accounts:

The Post office RD accounts provide rebates to depositors and incentivize them if they make advance payments. Thus, depositors get rebates on making a certain number of advance payments. The table below shows the rebate options provided to depositors on Post office RD accounts.

For 6 advance instalment payments

Rs. 10 for every Rs. 100

For 12 advance instalment payments

Rs. 40 for every Rs. 100

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