Published: 21st Jun, 2022
Context
Regarding minor savings deposit plans in India, India Post provides nine savings plans with interest rates of 7.2 percent annually on recurrent deposit (RD) accounts.
Background
- India Post operates across a network of more than 1.5 lakh post offices in the country and provides a variety of banking services.
- Recurring deposit (RD) accounts, one of India Post's nine savings plans, with an annual interest rate of 2 percent.
- Over a certain time period, small savings devices assist individuals in reaching their financial objectives.
- The government's modest savings program interest rates, which are updated weekly, are followed by the interest rates on these post office savings plans.
About
What is a Recurring Deposit (RD)?
- A recurring deposit is a type of term deposit.
- Unlike a fixed deposit account, a recurring deposit account allows the investor to park a fixed amount of funds at regular intervals; for instance, every month.
How to open a recurring account (RD)?
- Both cash and checks can be used to start a post office recurring deposit (RD) account. According to India Post, when it comes to checks, the date of deposit equals the date of presentation.
- A post office allows the opening of an unlimited number of RD accounts.
- A minor's name may also be used to create an account. An adult under the age of ten may open and manage the account.
Benefits
- The post office RD account has a five-year maturity term. On an annual basis, it may be extended for an additional 5 years.
- Any sum in multiples of Rs 5 can be established with a minimum monthly opening deposit of Rs 10.
- The amount invested in post office recurring deposits (RDs) has no upper limit.
- After a year, you can withdraw up to 50% of the sum in one go.
- On any day of the month, the monthly contributions ought to be credited.
Disadvantage
- Throughout the duration of the account, the withdrawal amount must be reimbursed in full, plus interest at the specified rate.
- A default occurs when a monthly installment is not paid.
- According to India Post, if there is a monthly default amount in any RD account, the depositor must pay the defaulted monthly deposit together with the default cost before paying the current month's deposit.
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