The 5-year Post Office Recurring Deposit (PORD) scheme, also known as National Savings Recurring Deposit, allows you to save on a regular monthly basis for 5 years. i.e. 60 monthly installments. These deposits earn interest as per the applicable rate compounded on a quarterly basis. It is ideal for individuals with regular income who wish to stock up their savings through regular monthly deposits of a fixed amount for a certain period of time.
Post Office Recurring Deposit Interest Rates
The Post Office Recurring Deposit interest rates for the period July 2023 to September 2023 is 6.5% p.a. (compounded quarterly).
Features of Post Office Recurring Deposit Scheme
Given below are the key features of Post Office Recurring Deposit scheme:
- Minimum installment – Rs.100,higher deposits in multiples of Rs. 10.
- No maximum limit on deposit amount
- Deposits can be made in cash/cheque and in case of cheque, the date of deposit shall be the date of clearance of cheque
- Nomination facility available
- Rebate available on advance payment of 6 or more RD installments. That is, for Rs. 100 denomination rebate of Rs. 10 for 6 months and Rs. 40 for 12 months
- Sole/joint (up to 3 adults) operation allowed
- Interest on RD compounded quarterly
- Missed deposits will incur a default fee for each defaulted month. A default of Re. 1 will be charged for Rs. 100 denomination account (and a proportionate amount for other denominations)
- Premature closure allowed after three years
- Easily transferable from one post office to another.
- Loan facility up to 50% of balance credit in the account after 12 installments are deposited and the account is continued for 1 year
Eligibility Criteria
The following are key eligibility criteria for opening a 5-year Post Office Recurring Deposit:
- Indian nationals over 18 years may singly or jointly (up to 3 adults) operate a 5-year Post Office Recurring Deposit account
- Parent/guardian can open a PORD account on behalf of a minor/person of unsound mind
- A minor above the age of 10 years can open a PORD account in his own name
Note: There is no limit on the number of accounts that an individual can have in his name or jointly with any other person
Aadhaar and PAN Now Mandatory for PORD Account
- It is now mandatory to provide your Aadhaar number and PAN to open a new PORD account as per a recent notification issued by the Ministry of Finance. In case you have not been assigned an Aadhaar, you need to provide proof of application of enrollment for an Aadhaar card or enrollment ID at the time of opening the PORD account and furnish the Aadhaar number to the Accounts Office within 6 months from the date of opening the account.
- If you already have an existing Post Office Recurring Deposit account and have not submitted your Aadhaar number, you need to do so within a period of 6 months with effect from 1st April 2023. Also, if you have not submitted your PAN at the time of opening the PORD account, you need to submit the same within a period of 2 months from the date of happening of any of the following events, whichever is earliest, namely:
– The balance at any given time in the account exceeds Rs. 50,000
– The aggregate of all credits in the account in any financial year is more than Rs. 1 lakh
– The aggregate of all withdrawals and transfers in a month from the account is more than Rs. 10,000
- Failure to submit the Aadhaar within the specified period of 6 months and PAN within the specified period of 2 months will result in the account becoming inoperative till the time Aadhaar number and/or PAN is submitted to the accounts office
Note: The information was first published in The Gazette of India. To know more, click on https://egazette.nic.in/WriteReadData/2023/244822.pdf
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Documents Required
You are required to furnish the following documents in order to open a recurring deposit account with India Post:
- Duly filled Application Form For Opening of Account
- KYC documents including identity proofand address proof.
Acceptable identity and address proofs include driving license, passport, voter’s ID, job card issued by NREGA signed by the State Government officer or letter issued by the National Population Register containing details of name and address
How to Open Post Office Recurring Deposit Account
Online Process:
To open a Post Office Recurring Deposit Account online, you need to have an existing Post Office Savings Account and should be registered for Indian Post Office internet banking services. Given below is a step-by-step guide to so:
- Go to the Indian Post eBanking website
- Enter your registered “User ID” and captcha code and click on “Log In”
- Under the General Servicestab, click on the ‘Service Request’ option
- Follow the on-screen directions to initiate the Post Office Recurring Deposit opening request.
Offline Process:
To open a Post Office Recurring Deposit account offline, follow the steps given below:
- Download the PORD application form online or collect one from the nearest post office
- Submit the duly-filled form and the documents mentioned above along with a minimum deposit of Rs. 100 at the post office to open your PORD account
PORD Deposits, Cut-Off Dates for Deposit and Advance Deposit
- Post Office Recurring Deposit Account can be opened by cash or cheque with a minimum monthly deposit of Rs. 100 and above minimum in multiples of Rs. 10
- In case the PORD account was opened by 15th of a calendar month, subsequent deposits have to be made up to the 15th day of a month. In case the account is opened between the 16th day and the last working day of a calendar month, subsequent deposits can be made up to the last working day of the month.
- Advance deposits of up to 5 years can be made if the PORD account is not discontinued. These deposits can be made at the time of opening of the account or any time thereafter
- You can also avail rebate on advance deposits. If at least 6 installments are paid in advance (inclusive of the month of deposit), for Rs. 100 denomination a rebate of Rs. 10 is offered and a rebate of Rs. 40 is offered in case 12 installments are paid in advance.
What will Happen if you Default on your PORD Account
- In case subsequent deposits are not made up to the prescribed day for a month, a default is charged for each defaulted month. A default fee of Re. 1 will be charged for every Rs. 100 denomination.
- In case there is a monthly default, the RD account can be revived by paying the defaulted monthly deposit with default fee along with the current month’s deposit
- After 4 regular defaults, the PORD account will be discontinued. However, it may be revived within 2 months from the fourth default. But in case the account is not revived during this period, no further deposit(s) can be made in this account and the account is deactivated.
- Moreover, if there are not more than four defaults in monthly deposits, the PORD account holder has the option to extend the maturity period of the account by as many months as the number of defaults and deposit the defaulted installments during the extended period
Loan on Post Office Recurring Deposits
- Loan facility can be availed by submitting the loan application form along with passbook at the concerned Post Office
- Loan facility up to 50% of the balance credit in the PORD account can be availed once 12 installments are deposited and the account is continued for 1 year. However, loan facility is not discontinued depositors
- Interest on loan is applicable as 2% plus RD interest rate applicable to the RD account. Moreover, interest will be calculated from the date of withdrawal to the date of repayment
- Loan can be repaid in lump-sum or in equal monthly installments
- In case the loan is not repaid till maturity, the loan plus interest will be deducted from the maturity amount of the PORD account
Premature Closure of Post Office Recurring Deposit Account
With Post Office Recurring Deposits, account holders can withdraw even before maturity by submitting the prescribed application form at the concerned post office. The only applicable condition is that a minimum of 3 years must have elapsed from the date of account opening in order to be eligible for premature withdrawal. Given below are key terms and conditions for premature withdrawal of a Recurring Deposit-
- Post Office Savings Account interest rate is applicable in case of premature withdrawals
- In case advance deposits are made in the PORD account, premature closure will not be allowed until the period for which advance deposits have been made
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Repayment on the Death of Account Holder
- In case of the account holder’s untimely demise, the claimant/nominee can submit a claim at the concerned Post Office to get the eligible balance of the RD account
- Once the claim is sanctioned, legal heir(s)/nominee can continue the RD account till maturity by submitting an application at the concerned Post Office
Post Office Recurring Deposit Account Maturity and Extension Options
- The Post Office Recurring Deposit account matures after 5 years (60 monthly deposits) from the date of account opening
- On maturity, the account holder can choose either of the following options:
- Retain the RD account up to 5 years from the maturity date without deposit
or
- Extend the PORD account for 5 more years by submitting the application for the same at the concerned Post Office. Interest rate at which the account was originally opened will be applicable during the extended period. Moreover, the extended account can be closed any time during the extension period. RD interest rate will be applicable for the completed years and for a period less than a year, Post Office Savings Account interest rate will be applicable.
FAQs
Q. Can an RD account be opened at the post office in the name of a minor?
Ans. Yes, you can open an RD account in the name of a minor. However, the minor should be above 10 years of age.
Q. What will be my total savings and total interest earned if I invest in the 5-year Post Office Time Deposit?
Ans. Your total savings and the interest that you earn depends on the amount of investment that you make in your PORD account.
Q. Can NRIs invest in the Post Office Recurring Deposit scheme?
Ans. No, only resident Indians can own and operate a PORD account.
Q. Can I transfer my Post Office RD from one post office to another?
Ans. Yes, you can transfer your PORD account from one post office to another by filling up the transfer request form.
Q. Is TDS applicable on the interest earned on Post Office Recurring Deposit?
Ans. Yes, TDS is applicable on the interest earned on PORD accounts. In case the interest earned on Post Office Recurring Deposit accounts is more than Rs. 10,000 in a financial year, TDS at the rate of 10% is deducted by the Post Office before crediting the interest to your account.
Read more about TDS/Tax Deducted at Source
Q. Is PORD interest taxable?
Ans. Yes, interest earned from Post Office Recurring Deposit is taxed at the income tax slab rate.