5-Year Post Office Recurring Deposit

This is another small savings scheme of the government through post offices. An account can be opened singly or jointly with another person, for a minor or by a minor over 10 years of age from any post office in India. Like in other post office schemes you get a Pass Book where entries are recorded. A minimum of Rs 10 must be deposited every month for 5 years. If you default less than 4 times your account can be continued within 2 months of default by paying a penalty fee.

Up to 50% of the amount can be withdrawn after a year. Loan can be availed pledging your postal recurring deposit as security after the 1st year. Account can be closed prematurely after 3 years of opening it. If you pay deposits in advance for 6-11 months you get a rebate of 10% on the amount to be deposited and a 40% rebate on advance deposit for 12 months or more.

Min & Max Investment

Min- Rs 10, Max- no limit

Current Rate of Interest

8.30%p.a. compounded quarterly

Maturity/ Tenure

5 years extendible up to 5 more years on yearly basis

Tax Benefit

No tax rebate.

Regretfully interest in post office recurring deposit is lower than that available on bank RDs. There are no tax benefits either except that TDS does not apply.

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