India’s investment landscape has always been diversified–like the nation itself–and it has been expanding every passing year as more investors are exposing themselves to different sorts of investment tools, including direct investment in equity through the stock market, mutual funds, Exchange Traded Funds, and others. 

However, the nation still has a strong pool of conservative investors looking for guaranteed, risk-free returns, and Recurring Deposits (RD) remain one of the most reliable wealth creation instruments for them.

If you are one of them, then finding a better interest rate should be your priority. Let’s understand where you are going to make more money if you invest Rs 5,000 every month for 5 years in either a Post Office Recurring Deposit or a State Bank of India (SBI) RD. 

SBI Vs Post Office RD: Rs 5,000 Monthly Investment Calculation

Post Office  RD Calculation 

  • Monthly Deposit: Rs 5,000

  • Tenure: 5 Years (60 Months)

  • Total Invested Amount: Rs 3,00,000 

  • Post Office RD Interest Rate: 6.70 per cent per annum 

  • Post Office RD Maturity Amount: Rs 3,56,830

  • Post Office RD Interest Earned: Rs 56,830

SBI RD, Rs 5,000 Calculation

  • SBI RD Interest Rate: 6.50 per cent p.a.

  • SBI RD Maturity Amount: Around Rs 3,55,284 

  • SBI RD Interest Earned: Around Rs 55,284

  • Total investment - Rs 3,00,000

The Rs 1,546 Yield Difference 

You deposit the same amount for over 5 years; depositing Rs 5,000 each month results in a principal investment of Rs 3,00,000.

  • With an interest rate of 6.7 per cent, your money compounded quarterly yields approximately Rs 56,830 in interest. This means the final maturity sum would be  Rs 3,56,830.

  • On the other hand, a Rs 5,000 monthly deposit in an SBI RD at 6.5 per cent p.a. yields a return of Rs 55,284 in interest, accumulating to a maturity value of Rs 3,55,284. 

Comparing the returns, the Post Office RD gives  Rs 1,546 more returns than SBI’s RD. The Rs 1,546 difference represents a 2.8 per cent higher interest output compared to SBI.

SBI RD Vs Post Office RD Account

You might not only consider the rate of return but also the accessibility. SBI RD can be seamlessly managed via the bank’s phone banking APP or internet banking. Additionally, auto-debits can be set for monthly deposits, and the same can be tracked as well. Meanwhile, India Post Payments Bank (IPPB) or Post Office allows online transfers; however, setting up and managing a Post Office RD can still require physical branch visits depending on account type and branch digitisation.

Investors can avail loan facilities–up to 50 per cent of the balance in a Post Office RD after 1 year— and premature closure under specific conditions.

What You Should Do

You should choose Post Office RD if your only goal is to maximise the end guaranteed returns. Additionally, you want to avoid upfront TDS deductions. On the other hand, choose SBI RD for seamless digital accessibility and other services.