India Post with a broad network of over 1.5 lakh post offices offers some nine central government-backed savings schemes. Interest rate on all of these schemes is reviewed and revised quarterly on the basis of the yield on 10 year-government bonds. For the quarter ending September 30, 2019, the interest rates on small saving schemes have been revised lower by 10 basis points amid falling interest across the financial system.
And of these schemes, Post office RD is a safe investment that currently offers 7.2% return. For the previous quarter which ended on June 30, 2019, the 5-year RD or recurring deposit scheme at the post office provided 7.3%.
Here are listed some of the rules that you should know when investing in Post Office RD account:
1. Account opening rules: As per the India Post website for opening the RD account at a post office, a minimum sum of Rs.10 per month has to be deposited. Further, monthly deposits can be in multiples of Rs. 5.
If the account is opened up to 15th of a calendar month then in the subsequent month the deposit in the RD account can be made up to 15th day of the next month and in a case if the RD account is opened between 16th day and last working day of the month then amount towards the account can be deposited until the last working day of the next month.
A person can maintain more than one RD account at Post Office in his or her name and can even have it as a joint account with another person.
2. Maturity proceeds: After a term of 5-years from the account opening date, the depositor in the RD account will be entitled to receive the deposited amount as a lump sum payment together with the interest component as prescribed from time to time.
3. Premature withdrawal rules: After a period of one year from the account opening date, the Post Office RD account allows one premature withdrawal up to 50% of the balance. And it has to be repaid as a lump sum payment along with the interest applicable thereof.
4. Late payment charges: If the RD account holder misses on the installment for a month towards the RD account then it is deemed to be a condition of default. And in such a case, a fee of 5 paise per Rs. 5 is levied. So, in case of default for a particular month, the depositor has to pay off the defaulted monthly amount first together with the default fee and thereafter he or she can deposit the installment for the current month.
It is to be noted that a maximum of 4 defaults are allowed and after it the account is discontinued. Nonetheless, you have a grace period of 2 months during which you can reinstate or revive the account. But in a situation when you fail to revive the account within the stipulated period, deposits can longer be made towards the RD account. And the same holds true for both CBS and non-CBS post offices.