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HomeFinance5-Year Post Office RD Vs SBI RD: Interest Rates On Deposits Compared

5-Year Post Office RD Vs SBI RD: Interest Rates On Deposits Compared

Recurring Deposit (RD) is a financial mechanism that allows individuals to deposit a predetermined amount of money on a regular basis and earn investment returns. It is perceived to be a stable investing opportunity between the salaried and middle-income classes.State Bank of India (SBI), the country’s largest lender and post office, provide customers recurring deposit options. Largest commercial banks such as the State Bank of India (SBI), HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, Punjab National Bank (PNB), etc. provide recurring deposits across different maturity periods.

It must be remembered that you can open a recurring deposit account either with a bank or post office is the sort of term deposit that helps investors to save a fixed amount by regular monthly deposits for a predetermined period. The recurring deposit coincides with the alternative of depositing a predetermined amount at predetermined periods. Depositors have the freedom to pick the predefined amount they want to contribute per month. The account manager cannot adjust the amount of the instalment after it has been set. For instance, if you open an RD account with a bank for Rs 2,000 every month for a year, you will have to keep depositing the same amount every month for a year on the account opening date. 

SBI RD Vs Post Office RD: Interest rate and all the benefits compared

Maturity period: One can open a post office RD account for a period of 5 years and one can open a SBI RD account for a maturity span of 1 year and 10 years respectively. Which implies that whereas an SBI recurring deposit account can be maintained for a minimum duration of 12 months and a limit of 120 months, the Post Office RD account has only a five-year limit.

Rate of interest: State Bank proposes an interest rate of between 5.80 per cent and 6.25 per cent on recurring deposits. For elderly people, the interest rate is 0.50 per cent higher. The SBI RD interest rate is the same as the TDR/STDR bank interest rate for the RD duration. Comparatively, the post office pays an annual interest rate of 7.3 per cent which is compounded on a quarterly basis. 

Account opening procedure: SBI’s recurring deposit account can be accessed electronically via SBI’s net banking framework if the individual has an online banking login credential. That being said, in order to open your RD post office account, you need to visit the nearest post office branch physically.

Minimum deposit limit: By depositing a minimum amount of Rs 100 and in multiples of Rs 10 one can open a SBI RD account online. That being said, a minimum of Rs 10 per month or any amount in multiples of Rs 5 is necessary for a post office RD account. No upper cap is set for deposit in SBI or the post office RD account online. 

Penalty charges: If, on the specified day, you do not make the required deposit in a Post Office RD account, a standard charge of Re 0.05 for every Rs 5 is levied. If you skip four installments, your account will be terminated, and can be restored within 2 months. However, if the same is not recovered during this time, no further investment can be rendered. For non-deposit of monthly contribution in a recurring deposit account, SBI bills Rs 1.50 per Rs 100 per month for RD accounts for a term of 5 years or less. Whereas, Rs 2 per Rs 100 per month shall be charged to the RD account for a term of more than 5 years. 

Raman Sonu
Raman Sonu
Raman is an Author, writer and blogger. He has knowledge and understanding of finance, stock, and market research. He has done Bcom in Finance. Please contact me at raman.sonu2020@gmail.com for any feedback or concern.
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