Post Office RD vs. SBI RD: Which Is The Popular Alternative?

Recurring deposits (RD) are among the most popular options for fixed-income investors. Similar to mutual funds SIPs, these deposits allow an investor to make monthly contributions. Recurring deposits have maturities of between one year and ten years. Apart from banks, including the SBI, ICICI Bank, and HDFC Bank, even the post office offers RD.

SBI Recurring deposits

SBI allows recurring deposits for durations of one year to ten years, with a minimum deposit requirement of ₹100 every month thereafter in multiples of ₹10. SBI is providing interest on recurring deposits in the range of 6.5% to 7% for the general public and 7% to 7.5% for senior citizens. These rates are effective from 15 February 2023.

SBI RD's latest interest rates

1 Year to less than 2 years 6.80%(general) 7.30% (senior citizens)

2 years to less than 3 years 7% (general) 7.50% (senior citizens)

3 years to less than 5 years 6.50 (general) 7.00 (senior citizens)

5 years and up to 10 years 6.50 (general) 7.50 (senior citizens)

Post Office Recurring deposits

Post Office Recurring Deposit comes with a maturity tenure of 5 years. A monthly contribution of at least ₹100 or any amount in multiples of ₹10 with no maximum limit. The post office RD procedure does not offer additional interest rate benefits for senior citizens. These rates are effective from 1 July 2023.

RD taxation rules

Tax Deduction at Source (TDS) is applicable on the interest earned on Recurring Deposits. A TDS of 10% is applicable on RD interest rates earned The TDS will deducted if the interest earned on the Recurring Deposits is more than Rs.10,000.

SBI RD vs. Post office RD: Which is better?

However, in light of India's retail inflation rate, which was 7.44% in July 2023, neither SBI nor Post Office RD can produce inflation-beating returns. Consumer Price Index (CPI)-based inflation shot past estimates to hit a 15-month high of 7.44% during July.