Recurring Deposit Account (RD) in Post Office
Post Office Recurring Deposit (RD) account is one of the popular savings schemes offered under National Savings Scheme by the Government of India through the world's largest postal network, Department of Posts (also known as India Post). The RD account can be opened in any Post Office, be it a Head Post Office, Sub Post Office, or Branch Post Office, thus giving you the flexibility to open an account in any of over 155,000 post office branches.
Types of RD account in Post Office
Following types of accounts can be opened under the scheme:
- Single Account: Opened by a single adult.
- Joint Account: Opened by up to three adults jointly (or two adults as per some older rules, check current norms). The amount on closure is payable to all jointly or to the survivor(s).
- Minor Account: Opened by a guardian on behalf of a minor, or by a minor aged 10 years or above in their own name.
- Account for Person of Unsound Mind: Opened by a guardian on behalf of a person of unsound mind.
Key features of PO RD Account
Post Office Savings RD Account is very popular among salaried individuals to build a corpus by making small monthly contributions. The basic key features are:
- Minimum monthly installment is ₹100, and thereafter in multiples of ₹10. There is no maximum limit.
- The monthly installment (denomination) cannot be changed once the account is opened.
- The tenure is 5 years (60 monthly deposits). It can be extended for another 5 years by submitting an application at the concerned Post Office before maturity. The interest rate applicable at the time of opening will continue for the extended period.
- There is no limit on the number of RD accounts an individual can open.
- Interest is compounded quarterly. The rate applicable at the time of account opening remains fixed for the entire tenure (including extension).
- A loan facility (up to 50% of the balance) is available after 12 installments have been deposited and the account has been continued for at least one year.
- Rebate is offered on advance deposit of at least 6 installments.
How to Calculate Post Office RD Interest? (पोस्ट ऑफिस आरडी कैलकुलेटर)
The maturity value (M) of an RD account can be calculated using the formula:
M = R * [((1 + i)^n - 1) / i] * (1 + i) (for deposits at beginning of period) - Simplified common formula is: M = P*n + P*n*(n+1)*r/(2*12*100) (approx. simple interest on average balance)
A more precise standard formula used by banks for compound interest on RD where 'i' is quarterly interest rate and 'n' is number of quarters:
M = R * [((1 + i)^N - 1) / (1 - (1 + i)^(-1/3))] where N is total number of installments (quarters concept here is for compounding, 'n' in your formula was years).
The formula given in your prompt M =R[(1+i)n – 1]/1-(1+i)(-1/3) seems to be a variation or specific interpretation. The standard compound interest formula for RD is generally applied.
Our calculator uses the standard quarterly compounding method for accuracy.
Where: M = Maturity Value, R = Monthly Installment, n = Number of Quarters (for compounding), i = Quarterly Interest Rate (Annual Rate / 400).