look news india
To secure your child’s higher education, school fees or important future goals, the 5-year National Savings Recurring Deposit Account scheme of India Post is considered to be the most reliable medium across the country. Away from the ups and downs of the stock market, this government savings scheme has a Sovereign Guarantee by the Government of India, due to which every penny deposited remains completely safe. If you plan to deposit ₹3,000 every month in a Post Office RD in your child’s name as a disciplined savings, then on maturity after 5 years you will get a huge lump sum fund with attractive interest.
Currently on Post Office 5 Year RD Account 6.7% per annum Interest is given at the rate of Rs. The biggest feature of this scheme is that the interest in it is calculated on compounded quarterly basis every quarter. This means that every three months your earned interest gets added to the principal amount and in the next quarter you get interest on that increased money, which increases the returns exponentially.
The details of an investment of ₹3,000 per month for 5 years (60 months) are as follows:
| Item (Component) | Description/Amount |
| Monthly Installment | ₹3,000 |
| Total Tenure of the Scheme | 5 years (60 months) |
| Applicable Interest Rate | 6.7% per annum (compounded quarterly) |
| Total investment in 5 years | ₹1,80,000 ($3,000 \times 60$) |
| Total Interest Earned | ₹34,097 |
| Total amount received on maturity (Maturity Amount) | ₹2,14,097 |
Thus, small savings of ₹3,000 continuously for 5 years will give you a secured interest of over ₹34,000 on an original deposit of ₹1.80 lakh, taking the total fund to over ₹2.14 lakh.
It is very easy to open RD account in the name of children as per post office rules:
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Children under 10 years of age: If the child is below 10 years of age, the account is opened in the name of the child under the supervision of a parent or legal guardian. This account is operated by the parents only.
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Children aged 10 years and above: Minors who have completed 10 years of age can operate their own RD account in their name and also put their signature on the form.
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On completion of 18 years of age: When the child becomes an adult, he has to submit his new KYC documents and signature to the post office, after which the account becomes completely under his control.
The following documents are required to open a child’s RD account in a post office:
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Birth certificate or Aadhar card of the child.
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Aadhar card and PAN card of parent or guardian.
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Two passport size photographs of the guardian.
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Prescribed application form for opening RD account of post office.
Post Office 5 Year RD is not limited to maturity fund only, but it also offers many other facilities as and when required:
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Loan facility: If the account remains continuously operated for 1 year and at least 12 installments have been deposited in it, then you can take up to 50 percent of the total amount deposited in your account as loan.
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Account Extension (extension for 5 more years): After completion of 5 years maturity, if you do not need the money immediately, then you can extend it for the next 5 years at the same interest rate by applying in the concerned post office.
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Premature closure: Under special circumstances, closure of the account is allowed after completion of 3 years, however in that case only interest is available at par with Post Office Savings Account (4%).