National Savings Recurring Deposit Account (RD)​​: Interest Rates, Benefits and how to invest

National Savings Recurring Deposit Account (RD) is a government introduced savings scheme. This scheme comes with a tenure period of 5 years. RD also includes a fixed interest rate over the tenure period. At present, the interest rate of the national savings recurring deposit is 5.8%. The interest rates are compounded annually and credited annually to the account.  

 National Savings Recurring Deposit is one of the popular small-scale savings schemes in the nation. The minimum amount you need to deposit in National savings RD is about Rs.100 per month. You can even deposit Rs.10. This attracts low-income families into the savings habit. National Savings RD will generate a fruitful return upon maturity. 

1) What is National Savings Recurring Deposit (RD)? 

First, the national savings recurring deposit (RD) was introduced in the year 1981 by the Government Of India. Later Government of India has reintroduced the National Savings Recurring Deposit in the year 2019. Now the government released it through notification No.GSR 918(E). You can open it in a post office too. 

The primary motto of the national savings recurring deposit (RD) is to bring the small investors who earn low income to invest in the scheme. The amount earned through this RD scheme will be helpful for those people to fulfilling their basic needs and expenses. To achieve, this feat Government has made Rs.100, the minimum amount to be deposited in the RD account.

2) Why National Savings Recurring Deposit (RD) account? 

As mentioned earlier this scheme is for low-income people and for those who need less risk of investment. First, low-income people can make this minimum deposit of Rs.100 without any burden. Then the people who look for less risky investment options national savings RD will be the better option as it is a Central Government-Backed savings scheme. 

Generally, the interest rate of national savings RD is about 5.8%. This interest rate is quite good while comparing other schemes in this sector. As it is a fixed interest, your earned interest will get accumulated on your RD account until the completion of the maturity period. This scheme works like bank RD, and other post offices schemes like PPF, NSC, KVP, and SCSS.

But varies in the point of

• The tenure period while PPF has 15 years
• Interest rate while PPF, NSC has an average interest rate of 7% to 8%
• Premature withdrawal feature
• Rebate facility 
• Minimum and maximum amount
• Revival of account 
• Advance deposits facility 

These are key reasons to choose that national savings recurring deposit (RD) will be a suitable investment option. 

3) What are the eligibility criteria to open an RD account? 

If you need to open a national savings recurring deposit account (RD) then you need to meet out certain eligibility criteria. 

• An individual must be an Indian Citizen to open a national savings RD account
• You can open an account on behalf of the minor
• An individual who was above the age of 10 can open a minor account by himself
• In this scheme, you can open a joint account too 
• RD Join account can be opened between the two persons and even between the three persons
• After attaining the age of 18 the minor account will be handed over to them
• No NRI are allowed to open a national recurring deposit (RD). 

These are the eligibility criteria for the Recurring deposit (RD) account holder. 

4) How to open national savings recurring deposit account (RD)? 

Generally, to open a national savings recurring deposit account you need to follow the below-mentioned steps. 

• Visit the nearby account office to open an NSRD account
• Aske for the NSRD application form which is the Form-I
• Fill in the details required carefully in Form-1 without any corrections 
• After that attach the required documents needed for KYC verification
• Then submit it to the NSRD account provider in the account office
• Note that you can open multiple NSRD accounts as per your wish 
• Then you need to make an initial deposit of a minimum of Rs.100
• It can be paid through cash, cheque, and demand draft
• If you have paid through cash your account will be opened immediately
• If you have paid through the cheque then it will take some business days to verify the realization of the cheque

You need to select a nominee for your NSRD account. These steps would be needed to be followed for opening multiple accounts too.  

4.1) What are the documents needed to open national savings recurring deposit account? 

While filling the Form-I which is an application form for national savings recurring deposit account you asked to attach some documents. Generally, these documents include 

• Your recent passport size photographs
• Then you need to submit your identity proof. Identity proof includes Aadhaar card, PAN card, driving license, Voter identity card, and Passport
• For address proof, you can use the same identity proof as mentioned above. In addition to that PSU id cars, central government id cards, and recent utility service bills can be attached as address proof. 
• Your signature or the witness signature for verification

After attaching all these documents with your application form, then you can submit it to the NSRD account provider for further KYC verification process. 

5) What are the different types of forms available for the NSRD account? 

Generally, for the NSRD there are 5 different types of forms available. Each form has a separate function as listed below. 

5.1) FORM-1

This form-1 is the application form to open a national savings recurring deposit account (NSRD) under 2019. This form consists of a list of fields. Fill the Form-1 as mentioned below

• A field to attach your passport size photograph
• Then the name of the primary account holder or the name of the first depositor
• The field for entering the name of the second depositor
• Then the field for entering the name of the third depositor
• The field to enter the total initial deposit
• Then you are asked to enter your PAN card number 
• After that, you are asked to enter the Aadhaar card number 
• Write down your current residential address
• Provide your contact details 
• Fill in the KYC details
• Finally, choose a nominee and enter the nominee details

In this way, the application form is needed to be filled. 

5.2) FORM-2

This form-2 is an application form of an NSRD account that is used for the premature closure of the account under the national savings recurring deposit scheme 2019. Form-2 consists of the minimum number of fields. To do premature withdrawal 

• You need to enter your name ie) the name of the applicant
• Then you would need to provide your NSRD account number. 

After filling this you can submit form-2 for premature withdrawal. 

5.3) FORM-3

Generally, this form-3 is an application form of an NSRD account that can be used for the closure of the NSRD account under the national savings recurring deposit scheme 2019. Likewise form-2 this form also consists of a minimum number of fields. For the closure of the account follow the below-mentioned steps. 

• First, enter the name of the applicant
• Then you need to enter your NSRD account number 
• Also, you need to mention the last date of the  tenure period (date of maturity)

After filling in these details you can submit form-3 for the closure of the account. 

5.4) FORM-4

This form-4 is an application form of an NSRD account that can be used for the extension of the NSRD account under the national savings recurring deposit scheme 2019. It has the same number of fields as form-3. Follow the below-mentioned steps to the extent the tenure of the account 

• First, enter the name of the applicant 
• Then enter your NSRD account number
• Also, enter the date of completion of tenure (date of maturity) 

After finishing these details submit form-4 to the account service provider. he/she will extend the tenure of your account. 

5.5) FORM-5

This form-5 is an application form of an NSRD account that can be used for taking loans against the NSRD account under the national savings recurring deposit account 2019. It has fewer fields. This form varies from from-3 and form-4. To fill this form follow the below-mentioned steps

• Likewise, fill in the name of the applicant first 
• Then enter the account number of the NSRD account 
• Finally, enter the loan amount you need to take against the NSRD account

After filling the form hand over the form to the account service provider. You can take a loan against the NSRD account which should not exceed 50% of your total standing balance in your NSRD account. 

6) How deposits are made in a national recurring deposit account (NSRD)? 

Generally, there are certain criteria to make deposits in the NSRD account. They are 

• For an NSRD account, the account holder would need to make at least 60 deposits in a month
• The first deposit for the NSRD account would be made at the time of opening the account
• If you open your NSRD account in the first fifteen days of the calendar month, then you can make subsequent deposits up to the fifteenth day of each month. This must be equal to the first deposit
• Whether you have opened your account between the second fifteenth day of the calendar month, then you can make your subsequent deposits which are equal to the initial deposit between the sixteenth day and the last working day of the calendar month. 
• Your account can be marked as a discontinued account. This is because of making  4 defaults in monthly deposits. If you wish to revive your account you are allowed to revive only after the 2 months from the month of 4th default 

7) What are the benefits of national savings recurring deposit account (NSRD)? 

Generally, the NSRD scheme comes with a lot of benefits 

7.1) Rebate facility 

• If you won’t have any defaults you are allowed to make advance deposits
• Through advance deposits, you are allowed to earn a rebate from the deposited sum
• For an advance deposit of more than six but less than 11, you can earn Rs.10 as a rebate
• If you make 12 advance deposits in a month you will earn a rebate of Rs.40. This is for every 12 deposits. 

7.2) Premature withdrawal and closure of the account 

Though NSRD won’t allow premature withdrawal before the completion of 3 years. After the completion of 3 years, the primary account holder can opt for premature closure of the NSRD account. Here the amount comes with the simple interest rate of the post office savings account. By filling the form-2, you can opt for premature closure of the account. 

8) What are the features of national savings recurring deposit account? 

• You can invest as low as Rs.100 in an NSRD account and there is no upper limit for maximum deposit
• The interest rate is revised every quarter by the Government of India
• It comes under a period of 5 years
• You can extend the maturity period
• It comes with the rebate facility 
• You can nominate a nominee for the NSRD account 
• Also, the account can be transferred to different branches around the nation
• You can open a joint account even with three members
• An individual can open an ‘N’ number of accounts 

Hereby concluding that National Savings Recurring Deposit Account suits well for those small investors. This scheme has flexibility so that low-income people find it easy to invest in this scheme. If you are a person looking for better returns and a steady income with less risk then you can invest in the National Savings Recurring Deposit scheme 2019. 

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