Recurring Deposit (RD) is a popular scheme of Postal Department and it’s a simple and secure scheme for investment. Ok, I know that you are all aware of this scheme but do you know there is also a Defaults system? Postal Department charged defaults fee from you when you late to pay your monthly premium. Let’s check How to Calculate RD Defaults Fee?
What is RD Defaults Fee?
RD Defaults Fee is a late fee of Recurring Deposit Scheme. There is a provision to collect a maximum of five defaults fee at a time. If yo unable to pay this regularly, your account will be treat as discontinued account. Before we calculate RD Defaults Fee, we have to know some basic feature of RD Account.
Basic Feature of Post Office RD Account :
A Recurring Deposit (RD) account can be open with Minimum INR 10/- per month or any amount in multiples of INR 5/- and there is No maximum limit.
From 01.04.2019, interest rates are as follows:-
- Rate of Interest is 7.3 % per annum (quarterly compounded), 4% on premature closure.
- On maturity of INR 10/- premium will be INR 725.05 and this Can be continued for another 5 years on year to year basis.
The Basic Feature of Post Office RD Account is as below.
i) The account can be opened by cash / Cheque and in case of Cheque the date of deposit shall be the date of presentation of Cheque
ii) Nomination facility is available at the time of opening and also after opening of account
iii) The account can be transferred from one post office to another
iv) Any number of accounts can be opened in any post office
v) The account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account
vi) Joint account can be opened by two adults
vii) The subsequent deposit can be made up to the 15th day of next month if an account is opened up to 15th of a calendar month and up to last working day of next month if an account is opened between the 16th day and last working day of a calendar month.
viii) If the subsequent deposit is not made up to the prescribed day, a default fee is charged for each default, default fee @ 0.05 Rs. for every 5 rupees shall be charged. After 4 regular defaults, the account becomes discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made.
ix) *If in any RD account, there is monthly default amount, the depositor has to first pay the RD Defaulted monthly deposit with default fee and then pay the current month deposit. This will be applicable for both CBS and non-CBS Post offices.
x) 4 Defaults Fee are allowed.
xi) There is a rebate on advance deposit of at least 6 installments.
xii) A single account can be converted into Joint and Vice Versa.
xiii) Minor after attaining majority has to apply for conversion of the account in his name
xiv) One withdrawal up to 50% as Loan of the balance allowed after one year. It may be repaid in one lump sum along with interest at the prescribed rate at any time during the currency of the account
xv) Premature closure allowed after three years.
Full maturity value allowed on R.D. Accounts restricted to that of INR. 50/- denomination in case of death of depositor subject to fulfilment of certain conditions.
In case of deposits made in RD accounts by Cheque, date of credit of Cheque into Government accounts shall be treated as date of deposit.
How to Calculate RD Defaults Fee?
As we all know that this article is related to “RD Defaults Fee” so, let’s check How to Calculate RD Defaults Fee manually?
Suppose you have a RD Account of Rs. 100/- and your last payment was December 2018 and now you are wanted to pay your premium on April 2019. Then below instruction may be followed.
Monthly Premium: 100/-
Premium Due: 4 Months (January 18 to April 19)
Defaults Months: 3 Months (January 2019 to March 19) as April is your Current Month.
Rate of RD Defaults Fee: 1%
Now Calculate RD Defaults Fee:
Total Premium: 100*4=400/-
Defaults Fee Calculation:
1st Month 100*1=100/-*1%=1/-
2nd Month 100*2=200/-*1%=2/-
3rd Month 100*3=300/-*1%=3/-
Total Defaults to be Paid: 6/-(1+2+3)
In this way you need to pay 406/- for four months installment.
Please remember if you RD Account open before 15th of any month then post office will be charged three months defaults plus 1st-month Defaults i.e (6+1)=7/- because the account that has open before 15th date is to be paid before 15th otherwise, one month fine will be charged from you.