National Savings Recurring Deposit Account

National Savings Recurring Deposit Account

The National Saving Recurring Deposit Account (RD) is a savings account regulated by the Indian Government, specifically designed to cater to small investors and assist them in accumulating funds for their various financial needs. With a minimum deposit requirement of Rs. 100, this account provides an accessible avenue for individuals who wish to invest in the future without assuming any significant risks.

This account functions as a Recurring Deposit Account, making it suitable for small investors looking to steadily build savings over time. Additionally, the flexibility of opening this account as either a single or joint account adds to its appeal, accommodating the preferences and needs of a diverse range of investors.

The National Savings Recurring Deposit Account stands out as a highly popular savings account among post office customers. This unique account enables individuals to make monthly contributions, ultimately building a substantial corpus over five years. With its low minimum investment requirement, the National Savings Recurring Deposit is particularly accessible to low-income earners, allowing them to leverage the benefits of the account and save for their future needs effectively.

The account’s attractiveness is further heightened by its competitive interest rates and the significant advantages it offers upon maturity. The quarterly compounding ensures that the invested money grows steadily, providing a valuable return upon maturity. This feature enhances the overall appeal of the National Savings Recurring Deposit Account for those seeking a reliable and rewarding savings option.

Key Highlights of National Savings Recurring Deposit Account

Here is the list of the key highlights of the National Savings Recurring Deposit Account.

Parameters Details 
Tenure5 Years
Minimum Deposit AmountRs. 100 per month
Maximum Deposit AmountNo maximum limit
Interest Rate

From 01.10.2023, interest rates are as follows:-

6.7 % per annum (quarterly compounded)

Premature ClosureAvailable after completing 3 years of payment

What Makes National Savings Recurring Deposit Account Unique?

The following are the salient features and benefits of the National Savings Recurring Deposit Account.

  • Flexibility

Individuals have the option to initiate the process of opening their accounts by making an initial deposit using either cash or a cheque. This flexibility in the choice of payment methods provides account holders with convenience and accommodates diverse preferences.

  • Account holders can nominate a nominee for their account

Account holders have the privilege of nominating an individual to act as a nominee for their account. This nomination serves as a vital provision, allowing account holders to designate a trusted person who would manage or inherit the account in the event of unforeseen circumstances.

  • Premature withdrawals are allowed after three years

Account holders have the flexibility to make premature withdrawals from their accounts, granted that a minimum period of three years has elapsed from the date of opening the account. This feature provides individuals with a degree of financial agility, allowing them to access funds before the initially stipulated term if the need arises.

  • Accounts are transferable

Accounts held under the National Savings Recurring Deposit Account offer the convenience of transferability across different post office branches. This feature allows account holders flexibility and accessibility, as they can seamlessly relocate their accounts to another post office branch if needed.

  • There is no capping on the number of accounts 

Under this account, there is no limitation on the number of accounts that an individual can open. This lack of capping provides account holders with the freedom to establish multiple accounts based on their financial goals and requirements. Whether for diverse savings goals, different family members, or distinct financial objectives, the absence of restrictions on the account count offers flexibility and customization.

  • The minimum deposit is as low as Rs 100

The accessibility of the National Savings Recurring Deposit Account is highlighted by its remarkably low minimum deposit requirement, set at just Rs 100. This affordability factor ensures that a broad spectrum of individuals, irrespective of their financial capacity, can participate in the accounr and initiate a structured savings plan. The nominal minimum deposit makes the account inclusive, encouraging even those with modest financial means to embark on a path of systematic savings and wealth accumulation.

  • Minor accounts would be converted to full-fledged accounts

Accounts held by minors in the National Savings Recurring Deposit Account undergo a seamless transition, converting into full-fledged accounts once the account holder reaches the age of maturity. This provision ensures a smooth progression from a minor’s account to an adult account, allowing the account holder to continue their savings journey without the need for additional administrative procedures.

  • Mature after five years

Accounts held under the National Savings Recurring Deposit Account reach maturity after a stipulated period of five years from the date of their opening. This predetermined timeline provides account holders with a clear and defined savings horizon, allowing them to plan for future financial goals or expenditures. Upon maturity, account holders have the option to withdraw the accumulated amount or explore further investment or savings avenues.

  • Investment Extension for another five years

Upon maturity of the National Savings Recurring Deposit Account, account holders have the flexibility to extend their investment by another five years. This option allows individuals to continue their savings journey within the framework of the account, maintaining the benefits of the initiative for an additional term.

  • At times of financial crisis, account holders can avail a loan of up to 50%

In times of financial crisis, account holders in the National Savings Recurring Deposit Account have the option to avail of a loan of up to 50% of the amount accumulated in their account. However, to qualify for this loan facility, account holders are required to have completed at least one year of participation in the account.

What Deposits are to be made in the National Savings Recurring Account?

  • The account can be opened by cash/cheque 

Accounts can be initiated by depositing cash or a cheque, and in the case of cheque deposits, the date of clearance of the cheque is considered the effective date of deposit. This account ensures that the account-opening process accommodates both cash and cheque transactions, providing flexibility for individuals to choose their preferred method.

  • The minimum amount for a monthly deposit is Rs. 100 and above the minimum in multiple of Rs. 10.

The National Savings Recurring Deposit Account stipulates a minimum monthly deposit requirement of Rs. 100, and subsequent deposits should be in multiples of Rs. 10. This structure offers flexibility to account holders, allowing them to contribute to their savings in a manner that aligns with their financial capacity.

  • The subsequent deposit shall be made up to the 15th day of the month if an account is opened up to the 15th of a calendar month.

In the National Savings Recurring Deposit Account, subsequent deposits are required to be made up to the 15th day of the month if the account is opened on or before the 15th of a calendar month. This condition establishes a specific timeframe for additional contributions, emphasizing a structured and timely approach to monthly deposits.

  • If the account is started between the sixteenth and the final working day of a calendar month, then subsequent deposits must be made up until the last working day of the month.

If the account is opened between the 16th day and the last working day of a calendar month in the National Savings Recurring Deposit Account, subsequent deposits are required to be made up to the last working day of the month. This provision accommodates a slightly extended timeframe for individuals who initiate their accounts later in the month, providing flexibility for timely contributions.

Explaining the Maturity of National Saving Recurring Deposit

  • 5 years (60 monthly deposits) from the date of opening.

The National Savings Recurring Deposit Account has a fixed tenure of 5 years, equivalent to 60 monthly deposits, starting from the date of opening the account. This structured timeline sets a clear and defined period for the account, allowing account holders to plan and track their savings journey through 60 monthly contributions.

  • The account can be extended for a further 5 years

The National Savings Recurring Deposit Account allows account holders to extend their accounts for an additional 5 years by applying at the concerned Post Office. During this extension period, the interest rate applicable will be the same as the interest rate at which the account was originally opened.

  • Extended accounts can be closed at any time during the period of extension.

In the National Savings Recurring Deposit Account, an extended account can be closed at any time during the period of extension. The interest rate applicable for completed years during the extension period will be the RD (Recurring Deposit) interest rate, reflecting the terms of the Recurring Deposit Account. However, for periods less than a year, the interest rate applicable will be the Post Office Savings Account interest rate.

  • RD account can be retained up to 5 years from the date of maturity without deposit.

In the National Savings Recurring Deposit Account, the Recurring Deposit (RD) account can be retained for up to 5 years from the date of maturity without requiring any additional deposits. This provision allows account holders a grace period during which they can keep their RD account active even if they choose not to make further contributions.

Explaining the Premature Closure of the National Saving Recurring Deposit

  • RD Account can be closed prematurely after 3 years

In the National Savings Recurring Deposit Account, the Recurring Deposit (RD) account can be closed prematurely after 3 years from the date of account opening. Account holders can initiate the premature closure by submitting the prescribed application form at the concerned Post Office. This option provides flexibility for individuals who may need to access their savings before the completion of the full 5-year tenure.

  • PO Savings Account interest rate will be applicable if the account is closed prematurely even one day before maturity.

If the National Savings Recurring Deposit Account is closed prematurely, even one day before its scheduled maturity, the applicable interest rate for the closure will be based on the Post Office Savings Account interest rate. This means that in the event of early closure, the interest calculation will be subject to the interest rate applicable to the Post Office Savings Account, which may be different from the interest rate associated with the Recurring Deposit.

  • No premature closure of the account shall be permissible until the period for which the advance deposits have been made.

Premature closure of the account is not allowed until the completion of the period for which the advance deposits have been made. In other words, account holders are restricted from closing the account prematurely before the specified period for which they have committed to making regular deposits.

This restriction is in place to maintain the integrity of the National Savings Recurring Deposit Account and ensure that account holders adhere to the agreed-upon terms, typically the entire tenure of the account, which is 5 years.

Can I take a loan on my National Savings Recurring Deposit Account?

  • Loan Facility after installments

According to the provided information, after 12 installments have been deposited, and if the account is continued for an additional year without any discontinuation, the depositor may avail of a loan facility. The loan amount available is up to 50% of the balance credit in the account.

This feature adds a financial flexibility aspect to the National Savings Recurring Deposit Account, allowing account holders to access a portion of their accumulated savings in the form of a loan after a specified period of regular contributions.

  • Loans can be repaid in one lump sum or equal monthly installments.

In the National Savings Recurring Deposit Account, if a depositor avails of a loan facility, the repayment can be made in one of two ways: either in one lump sum or through equal monthly installments. This flexibility in repayment options allows account holders to choose a method that aligns with their financial situation and preferences.

  • Interest on the loan will be applicable as a 2% + RD interest rate

According to the provided information, the interest on the loan in the National Savings Recurring Deposit Account will be applicable as 2% plus the Recurring Deposit (RD) interest rate that is currently applicable to the RD account.

This means that the interest charged on the loan will consist of a base rate of 2%, and it will be further augmented by the prevailing RD interest rate.

  • Interest will be calculated from the date of withdrawal to the date of repayment.

The interest on the loan in the National Savings Recurring Deposit Account will be calculated from the date of withdrawal to the date of repayment. This means that the interest accrues for the duration between when the loan amount is withdrawn by the account holder and the date on which the borrower makes the full repayment.

  • In case the loan is not repaid till the maturity, the loan plus interest will be deducted from the maturity value of the RD account.

If the loan, along with its accrued interest, is not repaid by the time the National Savings Recurring Deposit (RD) account reaches maturity, the outstanding loan amount and interest will be deducted from the maturity value of the RD account. This deduction ensures that the loan is settled before the account holder receives the final maturity proceeds.

Frequently Asked Questions

Here is the list of the frequently asked questions related to the National Savings Recurring Deposit Account.

This savings plan has a maximum term of five years (60 months).

Yes, you may request an early account closure after making consistent investments for three years from the account opening date.

Yes, the account holder’s beneficiary or legal nominee may receive the investment proceeds if he passes away before the plan’s maturity.

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