The post office personal loan scheme people ask about does not exist: the post office does not give personal, home or car loans at all. What it does allow is borrowing against your own post office savings, such as a loan on an RD at the RD rate plus 2%, or on a PPF at the PPF rate plus 1%, and you can pledge NSC, KVP or a time deposit to a bank.
Beware of calls or messages offering a post office personal loan scheme; they are not from the Department of Posts. Below are the genuine options and what each costs.
At a glance
Personal loan
Not offeredLoan on RD
Up to 50%, RD rate + 2%Loan on PPF
Up to 25%, PPF rate + 1%NSC, KVP, TD
Pledge to a bankPLI and RPLI
Policy loan after a few years
Post office loan interest rate on each option
| Borrow against | When | How much | Interest |
|---|---|---|---|
| RD | After 12 instalments | Up to 50% of balance | RD rate + 2% (about 8.7% now) |
| PPF | Years 3 to 6 | Up to 25% of an earlier balance | PPF rate + 1% (about 8.1% now) |
| NSC, KVP, TD | Any time | Set by the lending bank | Bank's secured loan rate |
| PLI or RPLI | After a few policy years | Part of surrender value | Set by the policy rules |
Post office personal loan scheme: the truth
India Post's savings bank and its payments bank do not lend money as personal loans. Some offices let partner lenders advertise, and the payments bank may refer customers, but the loan, its rate and its terms come from that lender, not from the post office. Any offer of a post office personal loan, home loan or car loan with a low post office interest rate should be checked carefully, and you should never pay a fee upfront to receive a loan.
How a loan on RD works
Your ₹2,000 a month RD has run for 18 months, so the balance is close to ₹38,000. You can borrow up to about ₹19,000. At 8.7% a year, borrowing ₹15,000 for six months costs about ₹650 in interest. Anything unpaid at maturity is simply netted off the payout.
How a loan on PPF works
In years three to six, the ceiling is a quarter of the balance as it stood two years before the year you borrow. It must be repaid within 36 months, and interest is 1% above the PPF rate. If you repay late, the interest charged rises sharply, so plan the repayment. From the seventh year, partial withdrawal replaces loans.
Pledging NSC, KVP or a time deposit
Banks accept post office certificates and deposits as security. Once the pledge is noted in post office records, the bank lends at a secured rate, usually cheaper than an unsecured loan. The certificate keeps earning interest while pledged. See NSC rules and KVP rules for how pledging works.
Which option is cheapest
- For a small, short need: a PPF or RD loan, since the cost is only 1% or 2% above what your money earns.
- For a larger sum: a bank loan against NSC, KVP or a time deposit.
- Avoid breaking SCSS or MIS for a short need; the closure charges often cost more than a loan.
Frequently asked questions
Does the post office give personal loans?
No. It offers loans only against your own RD, PPF or insurance policy.
What is the post office loan interest rate on RD?
2% above the RD rate, about 8.7% at current rates.
Can I get a home loan from the post office?
No. Home and car loans are not offered by the post office.
Is borrowing against a post office PPF allowed?
Yes, in financial years three through six, priced one point over the PPF rate.
Is a post office loan call genuine?
Be very careful. The post office does not sell personal loans by phone, and asks for no advance fee.