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Recurring Deposit

Recurring Deposit in India

Last Updated 09th Mar 2021

Recurring deposit is a type of term deposit offered by financial institutions such as banks that allow investors to deposit funds in the Rd account on a monthly basis for a fixed tenure. An RD is different from a fixed deposit as funds are invested in regular instalments instead of lump-sum.

Interest Rate Upto 8.50%
Tenure 6 months to 60 months
Deposit Amount ₹ 10 to No Limit
Top Providers Banks, NBFCs, Post Offices or Small Finance Banks
Popular RD Schemes Regular RD, Senior Citizens Recurring Deposit, Flexi RD
RD Calculator
Investment Offers with High Returns offerOffers
Bank/NBFCs Rate Tenure Action
Bajaj Finance FD7.25%60 MonthsAPPLY
PNB Housing Finance FD6.95%120 MonthsAPPLY
HDFC Bank FD6.25%10 YearsAPPLY

Top Bank Recurring Deposit Schemes in India

Bank Interest Rates Senior Citizen Rates
SBI Recurring Deposit 5.00% - 5.40% 5.50% - 6.20% Explore More Calculator
HDFC Bank Recurring Deposit 3.50% - 5.50% 4.00% - 6.00% Explore More Calculator
ICICI Bank Recurring Deposit 3.50% - 5.35% 4.00% - 5.85% Explore More Calculator
Axis Bank 4.40% - 5.50% 4.65% - 6.05% Explore More Calculator
Kotak Bank 4.40% - 4.75% 4.90% - 5.25% Explore More Calculator
IDFC First Bank 5.00% - 6.00% 5.50% - 6.50% Explore More Calculator
Bank of Baroda 3.70% - 5.25% 4.20% - 5.75% Explore More Calculator
Citibank 2.75% - 3.00% 3.25% - 3.50% Explore More Calculator
IDBI Bank 5.75% - 5.90% 6.25% - 6.40% Explore More Calculator
Indian Bank 3.95% - 5.25% 4.45% - 5.75% Explore More Calculator
Indian Overseas Bank 5.75% - 6.80% 6.25% - 7.30% Explore More Calculator
PNB 4.40% - 5.30% 4.90% - 5.80% Explore More Calculator
Allahabad Bank 3.95% - 5.25% 4.45% - 5.75% Explore More Calculator
Andhra Bank 5.50% - 5.80% 6.00% - 6.30% Explore More Calculator
Bank of India 6.25% - 6.70% 6.75% - 7.20% Explore More Calculator
Bank of Maharashtra 6.00% - 6.60% 6.50% - 7.10% Explore More Calculator
Canara Bank 4.45% - 5.50% 4.95% - 6.00% Explore More Calculator
Central Bank of India 6.20% - 7.00% 6.70% - 7.50% Explore More Calculator
Punjab and Sind Bank 4.45% - 5.25% 4.95% - 5.75% Explore More Calculator
UCO Bank 4.90% - 5.00% 5.15% - 5.50% Explore More Calculator
Union Bank of India 4.50% - 5.60% 4.50% - 5.60% Explore More Calculator
Bandhan Bank 5.40% - 6.75% 6.15% - 7.50% Explore More Calculator
AU Small Finance Bank 5.75% - 7.53% 6.25% - 8.03% Explore More Calculator
India Post Office 5.80% - 5.80% 5.80% - 5.80% Explore More Calculator
Ujjivan Small Finance Bank 6.25% - 7.50% 6.75% - 8.00% Explore More Calculator
Equitas Small Finance Bank 6.40% - 6.65% 6.90% - 7.15% Explore More Calculator
Jana Small Finance Bank 6.75% - 8.50% 7.35% - 9.10% Explore More Calculator
ESAF Small Finance Bank 6.00% - 8.00% 6.50% - 8.50% Explore More Calculator
DBS Bank 2.50% - 5.50% 2.50% - 5.50% Explore More Calculator
Lakshmi Vilas Bank 2.75% - 6.00% 2.75% - 6.50% Explore More Calculator
South Indian Bank 5.40% - 5.50% 5.90% - 6.00% Explore More Calculator
Syndicate Bank 4.45% - 5.50% 4.95% - 6.00% Explore More Calculator
Corporation Bank 6.50% - 6.80% 7.00% - 7.30% Explore More Calculator
Yes Bank 5.50% - 6.75% 6.00% - 7.50% Explore More Calculator
RBL Bank 5.25% - 6.75% 5.75% - 7.25% Explore More Calculator
Karur Vysya Bank 6.75% - 7.00% 6.75% - 7.50% Explore More Calculator
IndusInd Bank 7.25% - 8.00% 7.75% - 8.50% Explore More Calculator

Who is eligible to open a Recurring Deposit online account?

A recurring deposit can be opened online by any of these:

  • An individual above the age of 18.
  • A minor who is above ten years of age.
  • Minors below or equal to ten years of age can open an RD account in the guardianship of a parent.
  • Any registered commercial organization, corporate firm, company, or proprietorship.
  • Any government organization

Can I renew my RD account after its maturity?

Recurring Deposit accounts can be renewed after maturity as and when the prefixed instalments have been paid successfully over the period by the depositor. The renewal of RD after maturity is considered as a new account, and thereby the interest calculation is done based on updated rates. Also, most lenders offer the renewal of RD for the same tenure as that up to maturity. For instance, if you have completed 60 instalments for your RD, that is five years, then the renewal of RD will be accepted for five years only.

Is Nomination facility available on Recurring Deposits?

Yes, recurring deposits provide the nomination facility to deposit holders. However, only one nominee per RD account is allowed, irrespective of the fact whether the RD was opened in a single name, or jointly by multiple people. However, there is a provision to change the nominee over the RD tenure, by filling the required forms and declaring the same to the bank. The nomination facility on RD functions as per the directives laid by the RBI.

Is Premature Withdrawal allowed on Recurring Deposit?

A recurring deposit does not allow partial, and midterm withdrawal, however premature withdrawal of RD is allowed. The deposit holder can break the recurring deposit account with the bank in case of financial emergencies by closing their RD account. However, closing the account prematurely will attract a penalty of 1 or 2 per cent. This penalty is deducted from the interest accrued on RD account for the period for which the deposit was with the bank. In addition, it must also be kept in mind that the minimum lock-in period for a recurring deposit is three months. Thus, any request for premature withdrawal before the three months will lead to zero interest earned on RD, followed by the return of only the principal amount deposited.

Is RD Taxable?

As per the regulation announced on June 1, 2015, the recurring deposits are subjected to TDS deductions. This is because the interest earned on RD is added to the annual Income of the depositor under the head ‘Income from other sources’. However, the TDS is not deducted if the interest earned on recurring deposits does not exceed ₹ 10,000.

Income tax on Interest on Recurring Deposit

The interest earned on RD is added to the annual Income of the depositor under the head ‘Income from other sources’. However, the TDS on RD is not deducted if the interest earned on recurring deposits ranges up to ₹ 10,000. Also, it must be noted that while the RD is taxable, yet this applies only for those RD holders who fall in the tax slabs that are obliged to pay income tax returns. Thus, income tax holders that are exempted from paying the tax as per their annual Income of up to ₹ 2.50 Lakh in case of regular citizens, and up to ₹ 3,00,000 or five lakhs in case of senior citizens based on their age, can avoid availing the TDS deductions. For this, the regular citizens are required to submit the Form 15 G, while senior citizens need to submit Form 15 H.

What is the revised TDS Rate 2021 for RDs?

As per the current regulations, A TDS of 10% is charged on the interests earned on fixed deposits. However, if the interests earned is below, or up to ₹ 10,000, then the TDS is not deducted.

Can I get a Loan against Recurring Deposit?

Yes, one can avail a loan against Recurring deposit, by treating the RD as collateral. An RD account holder can avail a loan up to 75-90% of the value of the deposit. This, however, may vary across different banks. The interest rate charged on loan against recurring deposit is usually 1-2% higher than the regular interest rate offered on the RD account. Availing a loan against RD is beneficial to fulfil the financial urgencies, as one is not required to break their RD in order to avail the loan. Thus, one can cope up with the financial distress without compromising on the investment factor.

Type of Recurring Deposit

Other than the regular recurring deposit, there are different types of RD that are customized as per the needs of the different kinds of investors. These are listed as follows:

RD for senior citizens: A RD for citizen citizens provides the same benefits as that of a regular recurring deposit. However, these RDs provide a higher interest rate than that of a regular RD. The additional interest rates offered on senior citizens ranges between 0.25% to 0.75%. Thus, this helps senior citizens earn a higher maturity amount. It can be opened by people above the age of 60.

RD for NRI: RD investment options are not only offered to the Indian residents but also to the NRIs that are the Non-Resident Indians. The NRI deposit holder can invest in the NRI account through the NRE or the NRO accounts that stands for Non-resident external account and non-resident ordinary account respectively.

Flexi RD: The Flexi RD is a type of recurring deposit that allows the investor to invest funds in an RD as per his or her convenience. As per this facility, the individual can deposit funds by breaking it up in multiples of the core amount, which however is pre-decided as per the terms and conditions.

Who can issue a Recurring Deposit?

A recurring deposit can be offered by different financial institutions. Some of these are listed below:

  • Public Sector Banks
  • Private Sector Banks
  • Non-Banking Financial Institutions
  • Post Offices
  • Co-operative banks
  • Small Finance Banks

  • Depositing money in RD account through IPPB App
    If you have invested in the Post Office RD scheme, you can now transfer your money online through India Post Payments Bank App. Here is a step-step procedure to deposit your monthly RD instalments online.
    • Add money from your bank account to your IPPB account.
    • Now, go to DOP Products and choose Recurring Deposit.
    • Enter your RD account number and then DOP customer ID.
    • Now, choose the instalment amount & duration.
    • IPPB will notify you for successful payment transfer.

FAQs

What does Recurring deposit mean?

A recurring deposit is a term deposit offered by financial institutions like banks or NBFCs that is beneficial for people with a regular source of Income. A recurring deposit allows one to deposit a fixed amount in the RD account on a monthly basis. It is a beneficial investment option for people who earn fixed Income, as one can avail assured returns.

What is an RD account?

A recurring deposit account is an investment account opened with a bank or an NBFC. The RD account holder is bound to deposit a fixed amount in this account on a monthly basis to earn interests. The RD account does not allow any partial or mid-term withdrawal and funds can be withdrawals after the maturity. The maturity amount is inclusive to the principal amount and interests earned.

What is the benefit of recurring deposit?

Recurring deposits provide a number of benefits such as flexibility, guaranteed returns, and regular savings. Apart, the recurring deposit facility can be availed even by minors under the supervision of their parents or guardians. RDs are equally beneficial for senior citizens, as they can earn additional interest rates. Also, RD holders can avail loan against RD, by keeping the RD as collateral and that too without compromising on the investment as one is not required to break the RD to avail this loan. Thus, recurring deposits are a beneficial investment option.

Is RD tax-free?

The interest earned on RD is considered as an additional source of Income, therefore it is taxable. However, if the interest earned is less than or up to ₹ 10,000, then the RD can be tax-free. Also, if one falls under the tax-slab that is exempted from paying tax, then they can save themselves from paying tax on RDs.

Can I withdraw RD anytime?

The minimum lock-in period for recurring deposit is three months. In case you withdraw your RD before this period, no interest will be provided on the deposited amount. Thereby, it is advisable to complete the lock-in period before withdrawing the RD.

What happens if the RD instalment is not paid?

If a person fails to pay their RD instalment for a particular month, then the bank or the NBFc may charge a penalty for the same. However, if the same is continued for a number of months, then the RD account is deactivated or even closed, and cannot be redeemed until the outstanding balance is paid off.

Can we change the RD amount?

No, one cannot change the RD amount during the pre-defined term for which one is bound to pay the RD instalment.

How many RD can I open?

One can open as many RD as they want. However, it must be kept in mind that the interest earned on RD is taxable if it exceeds ₹ 10,000. Thus, one must invest in multiple RD as per his or her financial abilities.

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    Bank credit which includes home, personal, car, two-wheeler, gold and education loans along with business and mudra loans grew by 6.36% to Rs 106.41 lakh crore. Deposits which include FD and RD rose by 11.41% to Rs 146.25 lakh crore in the fortnight ended January 15.
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    Bajaj Finance net profit fell 29% year-on-year to Rs 1,146 crore in the quarter ended December.Further, its total revenue dropped 5% over the year earlier to Rs 6,658 crore.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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