For investors seeking a safe, government-backed savings option with guaranteed returns, the Post Office Recurring Deposit (RD) scheme stands out as one of the best choices. With the security of government support and attractive interest rates, this scheme allows individuals to build a sizeable corpus by investing small amounts consistently every month.
Currently, the scheme offers 6.7% annual interest (compounded quarterly), making it a reliable avenue for those who prefer low-risk investments. Let’s understand how this scheme works, its benefits, and how you can accumulate over ₹7 lakh in just five years.
The Post Office RD is a small savings plan designed for people who want to save regularly without investing a large lump sum. Investors deposit a fixed amount every month for a lock-in period of five years (60 months).
Minimum investment starts from just ₹100 per month.
Deposits can be made in multiples of ₹10.
After maturity, investors receive their principal along with accumulated interest.
The scheme is especially suitable for salaried individuals, small business owners, and anyone who wants a disciplined savings habit with the assurance of government-backed returns.
One of the highlights of the Post Office RD is the ability to build a significant fund with regular deposits. Let’s look at an example:
Monthly Investment: ₹11,000
Tenure: 5 years (60 months)
Interest Rate: 6.7% (compounded quarterly)
At maturity, your total deposits will amount to ₹6.6 lakh. With quarterly compounding, you will earn ₹1,24,924 as interest, bringing the maturity value to ₹7,84,924.
This shows how even modest monthly savings can turn into a large sum over time, thanks to the power of compounding.
Even if you cannot afford ₹11,000 per month, the scheme still delivers attractive results. For instance:
If you deposit ₹10,000 monthly, your maturity amount after five years will be around ₹7,13,659.
Out of this, ₹6 lakh is your principal, and the remaining ₹1,13,659 is interest income.
This flexibility makes the scheme suitable for both small and medium investors.
For the July to September 2025 quarter, the Post Office RD is offering 6.7% annual interest. However, interest rates under small savings schemes are reviewed every three months by the Government of India. While the rate may change in the future, the return remains competitive compared to bank RDs.
Another advantage is that once you open an account, your interest rate is locked for the full 5-year period, ensuring stability in returns.
Life is unpredictable, and emergencies can strike at any time. To address this, the Post Office RD scheme also offers a loan facility.
After completing one year of deposits, investors can avail a loan up to 50% of their balance.
The loan interest rate is 2% higher than the RD interest rate.
This feature ensures liquidity and provides financial support without breaking your savings commitment.
While the default tenure is 5 years, investors can choose to extend the scheme for another 5 years upon maturity. By doing so, the invested money continues to grow, helping you create a much larger corpus over the long term.
Government-backed security: Safe from market risks.
Flexible entry point: Start with as low as ₹100 per month.
Disciplined savings: Encourages regular investment habits.
Attractive returns: 6.7% annual interest with quarterly compounding.
Liquidity support: Loan facility available after one year.
Extension option: Continue saving for up to 10 years.
The Post Office RD scheme is one of the most reliable investment options for conservative investors who prioritize safety over high risk. By investing ₹11,000 monthly, you can accumulate nearly ₹7.85 lakh in five years—a mix of your principal and assured interest income.
For those aiming to build wealth steadily while staying away from market volatility, the Post Office Recurring Deposit is a smart and secure choice.
📌 Disclaimer: Interest rates are subject to change as per government notifications. Investors should verify current rates before making a decision.
