Post Office or SBI RD: Where’s Your Money Safer?

Features of SBI Recurring Deposit 

Given below are the features of recurring deposits offered by State Bank of India:

1. The minimum monthly deposit is Rs.100, and there is no upper limit for RD deposits in SBI. 
2. The customers can deposit for a minimum period of 12 months to a maximum of 120 months. 
3. SBI charges penalties to the customers for delays in payments of installments. 
4. RDs are available in all SBI branches. 
5. Failure to pay three consecutive installments results in premature closure of the RD account, and the balance amount is paid to the customers. 
6. The bank offers the customers the chance to choose their preferred option for receiving the amount in maturity.  
7. SBI RDs are subject to TDS. 

Benefits of SBI Recurring Deposit 

The benefits of opening an RD in State Bank of India are: 

1. Customer can opt for ‘Payback Principal and Interest’ or ‘Convert to STDR’ upon maturity. 
2. SBI RD provides a nomination facility. 
3. Passbook is provided for specific schemes. 
4. SBI provides an overdraft facility up to 90% of the deposit amount. 

Types of SBI Recurring Deposit Schemes

The various types of RD schemes offered by the State Bank of India are: 

1. Regular RD - Basic RD scheme with tenure ranging between 1 year to 10 years. 
2. SBI Flexi Deposit - It offers flexible deposit amount with minimum of Rs.5000 to Rs.50,000 for a tenure of 5 years to 7 years for each financial year. Deposits can be made any number of times in a month and at any time during the month. 

How SBI Calculates RD Returns

The total amount upon maturity of the RD is calculated by the following formula: 

A= P(1+r/n)^nt 

A- Final amount 

P- Principal 

r- annual interest rate 

n- number of times interest compounded annually 

t- tenure 

Eligibility Criteria for SBI Recurring Deposits 

The RD account holder should fulfil the following criteria to open an RD account in SBI: 

1. Only Indian residents can open SBI RD. 
2. NRI (Non-Resident Indian) users must apply for NRO (Non-Resident Ordinary) or NRE (Non-Resident External) account. 
3. Minors can also open an RD account under the guidance of their legal guardian. 

Documents Required to Open SBI RD

The necessary documents for starting an RD at SBI are: 

1. Identity proof – any one of the following: 

• Aadhar or Voter ID card 
• Ration card 
• Government ID card 
• PAN card 
• Senior citizen card 

1. Address proof – any one of the following: 

• Electricity Bill or telephone bill 
• Bank account statements along with cheque 
• Passport 
• ID card or any certificate issued by Post Office 

Post Office Recurring Deposit 

The Post Office recurring deposit schemes are one of the preferred investment instruments as they provide an attractive rate of interest and a fixed return value upon maturity. Read on to know more details about Post Office RD. 

Features of Post Office Recurring Deposit 

The main features of Post Office recurring deposits are mentioned below: 

1. Any number of accounts can be opened in any post office by the depositor either singly or jointly. 
2. Depositors can nominate pre or post the RD account opening. 
3. Cash as well as cheques are acceptable for RD account opening.  
4. The date of cheques credited is considered the date of deposit. 
5. Default amount with penalty must be paid before the current month's deposit, in case of any default in any month. 
6. Penalty charges are 5 paise for each Rs.5 deposited, and after consecutive 4 defaults account gets discontinued. 
7. The post office allows withdrawal of up to 50% of the deposit amount after 1 year of account opening. 
8. The monthly installment can be paid by the 15th of next month if the account has been opened in the first half of the month. Payment can be made on the last date of the month for accounts opened in the second half of the month. 
9. On attaining majority, the minor must change the account status and convert to his/her name. 
10. Post office RD accounts are inter-convertible from joint to single and vice-versa. 

Benefits of Post Office Recurring Deposit 

The benefits of opening an RD in the Post Office are: 

1. There is no maximum limit for RD deposit, and the starting amount is Rs.10 per month, which can be incremented by multiples of Rs.5.  
2. RD can be opened for a minor of age 10 years or above.  
3. Post Office RDs ensure easy withdrawal.  
4. Post Office recurring deposits offer tax benefits under 80C of the Income Tax  Act.  
5. Post offices offer a rebate facility for advance payment only for six installments.  
6. RD funds can be opened jointly and can easily be transferred to saving accounts. 

Types of Post Office Recurring Deposit Schemes 

There are mainly three types of Post Office recurring deposit schemes based on tenure:

1. Short-term - The tenure ranges between 6 months to 3 years 
2. Mid-term - The tenure ranges between 3 years to 7 years 
3. Long-term - The tenure ranges between 7 years to 10 years 

How Post Office Calculates RD Returns

The return value for Post Office RD is calculated by the formula below: 

A= P(1+r/n)^nt 

A- Final amount  

P- Recurring deposit amount 

r- annual interest rate 

n- number of times interest compounded annually 

t- tenure 

Eligibility Criteria for Post Office Recurring Deposits 

Below are the criteria required to be eligible for opening Post Office RD: 

1. Individual must be an Indian resident above 18 years of age. 
2. RD account for minors over 10 years of age can be opened by their parent or guardian. 
3. Any Indian resident of 18 years of age or above can open RD jointly or singly.  

Documents Required to Open Post Office RD 

Essential documents required for starting recurring deposit schemes in the Post Office are: 

1. RD application form 
2. Two passport-size photographs 
3. Identity and address proof- PAN card, Aadhar, Driving license, Voter ID card, Income Tax declaration form or ration card 
4. Signature of witness 

SBI RD vs Post Office RD 

The decision between SBI RD and Post Office RD is based on your preferences and the current interest rates. Before you make a choice, it is important to take into account aspects like accessibility, tenure, interest rates, and account management options. You must also evaluate the overall functionality of the recurring deposit scheme for your needs as well as your financial objectives.   

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