Post Office Recurring Deposit interest rate goes up; know about its eligiblity, maturity and loan benefits

The Centre has increased the interest rate on small savings schemes of the post office. The rate has been hiked by up to 30 basis points for the recurring deposit in the July-September 2023 quarter. This brings the rate of the Post Office Recurring Deposit (RD) scheme to 6.5 per cent. The interest rate on the Post Office Time Deposit scheme has also been revised for the one and two-year tenure. The rate has been hiked to 7.0 per cent from 6.9 per cent. The interest rates on the Senior Citizen Savings Scheme, Kisan Vikas Patra, Sukanya Samriddhi Account Scheme and National Savings Certificate have not been changed. 

In the light of this change, let’s take a look at the eligibility, maturity term and other factors of the Post Office RD scheme.

Post Office Recurring Deposit scheme: Eligibility

Any individual can open a Post Office RD account. A joint account can be opened by up to three adults. One can also start investing in the scheme on behalf of a minor. A minor above 10 years of age can open a Post Office Recurring Deposit in their own name. 

A person needs a minimum of Rs 100 or any amount in multiples of Rs 10 to open the account. There is no maximum threshold. The minimum amount to be deposited each month is Rs 100.

Know about Post Office RD scheme’s loan facility

Account holders can avail loans on the Post Office RD account. The loan can be taken if 12 instalments have been completed and the account is still active. Up to 50 per cent of the balance credited in the account can be taken as loan. The interest rate charged will be 2 per cent plus the interest rate applicable to the RD account. The loan can be repaid in either lump-sum or monthly instalments. In case loan is not repaid till the maturity, loan plus interest will be deducted from the maturity value of the RD account.

Premature closure of Post Office RD scheme

The Post Office Recurring Deposit account can be closed prematurely if three years have passed from the date of account opening. To initiate the process, the account holder must submit an application form to the concerned Post Office.

What is the maturity period if the Post Office RD scheme?

The scheme will mature five years after the opening of the account. The account can be extended for five years. In such a case, the interest rate applicable during the extension period will be the interest rate at which account was first opened.