As the name says, the RDA is a systematic way of saving money. The scheme is meant for those investors who want to deposit a fixed amount regularly, on a monthly basis, in order to get a tidy sum after 5 years on the maturity of the account, in his name or jointly with another.

RATE OF RETURN:
9.5% p.a., compounded quarterly, payable on maturity.

TAX CONSIDERATIONS:
Interest qualifies for deduction u/s 80 L.
No TDS on interest.

MODE OF ACCOUNT-HOLDING:
A recurring Deposit Account ( RDA) can be opened by an individual adult as a single person account, two adults in a joint mode, or by a guardian on behalf of the minor who has attained the age of 10 years in his own name.

TENURE:
The maturity period of the account is 5 years but the amount payable on maturity can be retained for a further period of 5 years without any monthly deposits; or the account can be continued for a further period of 5 years with regular monthly deposits.
A depositor can have more than one account in his name, or jointly, with other accounts being in the same post office or in a different post office.

DEFAULTS:
If there are not more than 5 defaults in monthly deposits, the depositor may, at his option, extend the maturity period of the account by as many months as the number of defaults and deposit the defaulted installments during the extended period.
If there are more than 5 defaults, the RDA shall be treated as discontinued. Revival of the account shall be permitted only within a period of 6 months from the month of 6th default.

REVIVAL:
Revival of such account will be promised only within a period of 6 months from the month of 6th default. The account can be revived if all the defaulted installments, along with interest up to the month in which the account is revived, are paid. If the account is not revived within the prescribed period, it shall be treated as discontinued and shall not be permitted to be revived after the said period.

WITHDRAWAL:
i.PREMATURE WITHDRAWAL (For an account in continuation)
The depositor can withdraw up to 50 per cent of the deposits made in the account, provided the account has been operational for a minimum period of one year, and 12 deposits have been made into it. Only one such withdrawal is allowed during the tenure of the account.
The account-holder has to pay back the withdrawn amount in monthly installments. The repayment of pre-maturely withdrawn amount shall be payable along with the monthly deposits and not separately during the maturity period of the account.
If the account is continued beyond the maturity period without fresh deposits, the monthly installments of repayment of withdrawal, if any, only may be paid during the period of such continuance.

ii.PREMATURE WITHDRAWAL (For a discontinued account):
Where the account has not been discontinued, withdrawal not exceeding 50 per cent of the deposits made in the RDA may be allowed after the account has been in operation for at least one year and 12 monthly deposits have been made. Only one withdrawal is allowed during the currency of the account.

AT MATURITY:
The matured value of the account will be paid after the period of 5 years from the date of first deposit or after the extended period of maturity as the case may be.
In case the date of maturity falls on a Sunday or a postal holiday, the payment shall be deemed to be due on the business day immediately preceeding the date of maturity.

FOR DISCONTINUED ACCOUNTS:
Where the account has become discontinued or where the defaults in monthly deposits in an account have not been paid during the maturity period or extended maturity period, the depositor will be entitled to a proportionate amount.
For example, If a person has paid 15 out of the 60 monthly installments, where each installment was for Rs 1,000, then his maturity value would have been Rs 75,853, had he paid all the 60 installments. However, as the account-holder has paid only 15 installments, he would get only a proportionate amount, that is 15/60 x 75,853 which comes to Rs 18,963.
The monthly deposits in the RDA account of the depositor can be substantially transferred from his savings account, on an application having made in this behalf in the prescribed Form, provided the two accounts stand in the same name and are in the same head/sub office.