How Post Office RD Works: Rs 100 minimum investment, interest rate, other features explained with example

Did you know that you can open a recurring deposit (RD) -- officially known as the National Savings Recurring Deposit Account -- at designated India Post branches? India Post, under the Ministry of Communications' Department of Posts, offers a string of small savings schemes for retail depositors. One of these small savings schemes, the Post Office RD scheme offers an interest rate of 6.7 per cent, compounded quarterly, for the quarter ending June 30, 2026, according to the India Post portal -- indiapost.gov.in.

What Post Office RD is and what it offers to depositors

This government-backed savings scheme is a financial product that offers guaranteed returns with widespread accessibility. It requires depositors to follow a disciplined savings programme involving fixed monthly deposits over a 5-year tenure to earn compounding interest. Both are largely available at most post offices.

The Post Office RD is a government-guaranteed monthly savings account tailored for small investors.

Here are five key things to know about this scheme:

Post Office RD: Interest rate and lock-in April-June 2026

The government reviews small savings scheme interest rates every quarter. For the first quarter of FY27, which began on April 1, the RD scheme pays interest at 6.7 per cent per annum.

The scheme matures in five years and allows premature closure after the completion of the first three years under certain conditions.

The scheme comes with a maturity period of five years, with an option to extend it for another five years.

India Post RD: Who can invest?

A Post Office RD account can be set up singly or jointly by resident citizens above 18 years of age.

There's no limit to the number of accounts allowed under the scheme in either mode.

To open an account, a duly filled Account Opening Form (AOF) needs to be submitted along with KYC documents. The account can be set up in online or offline mode.

Post Office recurring deposit minimum investment

One can open the account against a minimum investment of Rs 100 per month or multiples of Rs 10.

There is no upper limit to the monthly investment under the scheme.

RD premature withdrawal/closure

The premature closure option -- available only after the first three years -- can be exercised by bearing a fee.

Closing the account even one day before maturity reduces the applicable return to the savings account interest rate.

For Q1 of FY27, the Post Office Savings Account pays a 4.0 per cent return.

Loan against Post Office RD

The scheme offers a loan facility of up to 50 per cent of the deposits made in accounts that have been in operation for at least one year (12 monthly deposits), according to the website.

This loan can be repaid in one lump sum or in equal monthly instalments.

A simple interest rate of 2.0 per cent over and above the rate applicable to the loan account is payable as per provisions given under the scheme rules.

In case the loan is not repaid till the closure of the account, any outstanding amount is recovered from the amount payable on closure of the account.

Post Office RD examples

At the current interest rate of 6.7 per cent, a monthly RD of Rs 5,000 lets the depositor invest Rs 3 lakh in 5 years, leading to a maturity amount of approximately Rs 3.57 lakh (with a return of nearly Rs 57,000), calculations show.

Similarly, a Rs 12,000 monthly RD is estimated to turn total investment of Rs 10,08,000 into approximately Rs 12.87 lakh in five years.