Post Office Recurring Deposit (RD) is a small savings scheme backed by the government of India. Because of the attractive interest rate, post office recurring deposits have been the most preferred investment bet as opposed to banks. For a tenure of 5 years, one can open a post office RD account by depositing a minimum contribution of Rs 100 per month or any amount in multiples of Rs 10 with no upper limit. The interest on a recurring deposit at the post office is compounded per quarter. Depositors will get interest on their deposits every three months, for a total of four periods per year. A post office RD allows a total of 60 deposits across the span of the five-year term, i.e. one mandatory deposit per month. Interest rates on post office RD are updated on a quarterly basis and for the quarter ending on June 30, 2021 the current interest rate of post office rd is capped at 5.8%. Considering the interest rate here's how you can calculate your exact RD returns which you will get upon maturity.
Formula to calculate your RD returns
The compounding rule determines the rate of interest charged on a Post Office Recurring Deposit. The rate of interest is calculated using the compounding interest formula mentioned below.
P x (1+R/N) ^ (Nt) = M
Here P is the principal amount, R is rate of interest, N is Compounding Frequency (no. of quarters), T is Tenure and M is the maturity amount.
Suppose Mr A deposits in post office RD an amount of Rs 10,000 per month at a rate of 5.8% for 5 years or 60 months then he will get a maturity amount of Rs 6,96,967.
10,000 x (1+5.8%/20) ^ (20x5) = 6,96,967
Note: Customers can now view their RD account details online through the e-Banking platform of the Department of Posts (DoP). The e-Banking platform offers a variety of features, including the option to view a customer's RD account balance. To know how to login to your post office RD account and check balance online, click here.