Post Office Recurring Deposit Account

Post Office Savings Scheme India: Post office Recurring Deposit Account (RDA)

What is Post office Recurring Deposit Account (RDA)?
A Post-Office Recurring Deposit Account (RDA) is a  banking service offered by Department of post, Government of India at all post office counters in the country. The scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum after five years. The scheme, a systematic way for long term savings, is one of the best investment option for the low income groups.

Features:

• The minimum investment in a post-office RDA is Rs 10 and then in multiples of Rs. 5/- for a period of 5 years. There is no prescribed upper limit on your investment.
• The deposit shall be paid as monthly installments and each subsequent monthly installment shall be made before the end of the calendar month and shall be equal to the first deposit. In case of default in payment, a default fee is chargeable for delayed deposit at 0.20 Paise per month of delay, for Rs.10 Denomination. After more than four defaults, the account shall be treated as discontinued in case the account is not revived within two months from the fifth default.
• For Advance deposits for 6 months or 12 months, a rebate is allowed at the prescribed rate (For Rs 10 denomination:- Rs.1/- for 6 advance deposits, Rs.4/- for 12 advance deposits.
• One withdrawal is allowed after one year of opening a post-office RDA on meeting certain conditions. You can withdraw up to half the balance lying to your credit at an interest charged at 15%. The withdrawal or the loan may be repaid in one lump or in equal monthly installments.
• Premature closure is allowed on completion of three years from the date of opening and in such case, interest is payable as per the rate applicable for the Post Office Savings Bank Account.
• After maturity of the account, it can be continued for a further period of 5 years with or without further deposits. During this extended period, the account can be closed at any time.

Opening of Account

The account can be opened by a single adult of two adults jointly or a minor who has attained the age of 10 years or a guardian on behalf of a minor.
Deposits may be made a minimum of Rs.10/- once in a calendar month, in multiples of Rs.5/-. Amount of deposit made at the time of opening the account shall not be changed.
A depositor may have more than one account in his own name or jointly with others. There is no ceiling on deposit. Monthly installments can be paid in advance and in that case, a suitable rebate is allowed

Loan Facility

Loan up to half of the deposit may be taken after one year and before maturity. This must be repaid together with interest in one or more installments. Loan not repaid is deducted together with interest from the amount payable at the time of closure of the account.

Passbook

Depositor is provided with a pass book with entries of the deposited amount
and other particulars duly stamped by the post Office.

Loss of Passbook

A pass book is issued at the time of opening the account. If there is a loss, theft or the passbook is mutilated, a duplicate is issued on a charge.

Premature Closure

Premature closure of accounts is permissible after expiry of three years provided that interest at the rate applicable to post office savings account shall be payable on such premature closure of account.

Continuation after Maturity

Permissible for a maximum period of five years.

Tax Benefits

Tax benefits can be availed under section 80L. No Tax benefits are provided under section 88.

Defaults in Deposits

Accounts with not more than four defaults in deposits can be regularized
within a period of two months on payment of a default fee.

Account becomes discontinued after more than four defaults.