Post Office Recurring Deposit (RD) 2026: Interest Rate, Rules & How Maturity Is Calculated

By Nitish Bharadwaj · Published Jul 16, 2026 · 6 min

The Post Office Recurring Deposit lets you build a 5-year corpus with deposits as small as ₹100 a month, currently paying 6.7% per annum, quarterly compounded — a rate that's held steady for nine consecutive quarters. Unlike the 5-year Post Office Time Deposit, RD deposits get no Section 80C deduction at all. This guide covers the maturity formula, the default penalty that can discontinue your account after four missed instalments, the loan-against-RD facility available after a year of on-time deposits, and how PORD compares with a bank RD.

Every other Post Office Schemes guide on this site — SSY, POMIS, KVP, POTD — covers a lump-sum product. The Post Office Recurring Deposit is the one built for monthly savers instead: deposit as little as ₹100 a month for 5 years and walk away with a government-guaranteed maturity amount. The rate has sat at 6.7% for nine straight quarters, and the one detail most comparisons blur is that RD, unlike its Time Deposit sibling, gets zero Section 80C benefit — no tenure of it qualifies.

Current Interest Rate and Tenure

The Post Office RD interest rate for the Jul-Sep 2026 quarter is 6.7% per annum, compounded quarterly — unchanged from the previous quarter and, per the Ministry of Finance's small savings notification, the ninth consecutive quarter without a revision. The scheme runs a fixed 5-year tenure, which can be extended for another 5 years after maturity by giving written notice at your post office branch.

How the Maturity Amount Is Calculated

Post Office RD uses quarterly compounding on a monthly deposit stream, which is why the maturity value isn't simply (monthly deposit × 60) plus simple interest. India Post applies a standard compound-interest formula per instalment, and interest is credited and compounded every quarter even though you're depositing monthly. In practice, almost nobody calculates this by hand — it's easiest to check the projected maturity value with our RD calculator, which applies the same 6.7% quarterly-compounding logic to your own deposit amount.

Missed an Instalment? The Penalty and Discontinuation Rules

Miss a monthly deposit and you're charged a default penalty of ₹1 for every ₹100 of your monthly instalment, for each month you're late. You're allowed up to 4 such defaults. Cross that limit and the account becomes a discontinued account — it isn't closed automatically, but you get a 2-month window from the fourth default to revive it by paying every missed instalment plus the accumulated penalty. Miss that window too, and the account stops earning further deposits; the amount already in it continues to earn interest only until the original maturity date, at which point it's paid out as-is.

Premature Withdrawal and Loan Against RD

You can close a Post Office RD prematurely only after 3 years from the date of opening, by filing Form-2 online or at your branch. On premature closure, the account earns interest at the Post Office Savings Account rate for the period held — not the RD rate — which is a meaningful step down from 6.7%.

If you need funds without closing the account, a loan against your RD is available once the account has run for 12 months without default. You can borrow up to 50% of the balance standing to your credit at the time, at an interest rate of the applicable RD rate plus 2 percentage points. The loan must be repaid — either as a lump sum or in instalments — before the RD matures; whatever remains unpaid gets deducted from your maturity payout along with the accrued loan interest.

Post Office RD vs Section 80C — Don't Confuse It With POTD

This is the most common mix-up in this corner of post office schemes: the 5-year Post Office Time Deposit qualifies for a Section 80C deduction up to ₹1.5 lakh, but the 5-year Post Office Recurring Deposit does not, despite both running the same 5-year tenure. If you're specifically trying to build a tax-saving investment, our POTD guide covers the instrument that actually qualifies; RD is purely a disciplined-savings tool, not a tax-saving one.

Post Office RD vs Bank RD

Post Office RD's edge is the sovereign guarantee and a genuinely low minimum deposit, making it well suited to small, disciplined monthly savers, especially in areas with limited bank access. Its drawback is rigidity: no premature exit before 3 years and no online account opening unless you already hold a linked Post Office Savings Account with eBanking access. A bank RD trades some of that safety margin for flexibility — most let you close early anytime, just at a lower rate.

If you're deciding between post office instruments more broadly, our ranked list of small savings schemes puts RD alongside PPF, NSC, and SCSS side by side, and our POTD vs bank FD comparison covers the lump-sum equivalent. For the monthly-payout end of post office savings, see our POMIS guide. If you're weighing a fixed-return RD against a market-linked alternative for the same goal, our RD vs SIP comparison walks through the actual 5-year numbers on both.