The Government of India on 12 December 2019 announced a National Savings Recurring Deposit Scheme. It was notified through notification No. GSR 918(E). We have covered the following in this article:
1. What is National Savings Recurring Deposit Scheme?
The main objective of the National Savings Recurring Deposit Scheme is to provide small investors means to invest small amounts regularly to help them meet their future needs. An account under the National Savings Recurring Deposit Scheme can be opened with as low as Rs 100.
2. Types of Accounts
Under this scheme, an individual can open and maintain an account in his or her own name or jointly with another individual. Legal guardians are allowed to open an account under this scheme in the name of their minor child. On furnishing application in the format of Form-1 to the account’s office, the following accounts under National Savings Recurring Deposit Scheme can be opened:
i) An individual account
ii) A joint account operated by a maximum of three adults
iii) A minor account operated by the legal guardian
iv) A minor account by a minor who is at least 10 years old
3. Features of National Savings Recurring Deposit Scheme
The following are the salient features of the National Savings Recurring Deposit Scheme:
- Individuals can open their accounts by making the first deposit by cash or cheque
- Account holders can nominate a nominee for their account
- Premature withdrawals are allowed after a period of three years from the date of opening the account
- Accounts under National Savings Recurring Deposit Scheme are transferable across post office branches
- There is no capping on the number of accounts that can be opened under this scheme
- The minimum deposit is as low as Rs 100
- Minor accounts would be converted to full-fledged accounts once the minor account holder attains the age of maturity
- The National Savings Recurring Deposit Scheme accounts mature after a period of five years from the date of opening
- Once the account matures, account holders can extend their investment for another five years
- At times of financial crisis, account holders can avail a loan of up to 50% of the amount accumulated in their account, but they should have completed one year
4. Rate of Interest
The current rate of interest on National Savings Recurring Deposit accounts is 5.8% p.a. It is revised periodically, depending on various economic factors. The interest on these accounts is compounded on a quarterly basis.
National Savings Recurring Deposit scheme is an excellent investment option for those looking to invest regularly. One can invest as low as Rs 100 and there is no capping on the investible amount.