Recurring Deposits Interest Rates - All Banks
RD Interest Rates in India Oct 2017
|Interest Rate||4.00% to 8.00%|
|Minimum Deposit Amount||Rs. 10|
|Tenure||6 months to 10 years|
|Interest Compound Frequency||Quarterly|
|Partial and Midterm Withdrawal||Not Allowed|
|Premature Closure||Allowed with charges|
- Post office recurring deposit can be opened with minimum amount of Rs. 10.
- The interest on RD is compounded quarterly.
- Check and compare best RD rates online
Recurring Deposit Interest Rates Comparison, Oct 2017, Best rates
|Bank||Interest Rates||Senior Citizen Rates|
|SBI Recurring Deposit||6.50% - 6.95%||7.00% - 7.45%|
|HDFC Bank Recurring Deposit||5.75% - 6.90%||6.25% - 7.40%|
|ICICI Bank Recurring Deposit||6.25% - 7.10%||6.75% - 7.60%|
|Axis Bank||6.50% - 7.00%||7.00% - 7.50%|
|Kotak Bank||6.25% - 6.75%||6.75% - 7.25%|
|IDFC Bank||6.75% - 7.25%||0.00% - 0.00%|
|Bank of Baroda||6.50% - 7.00%||6.50% - 7.00%|
|IDBI Bank||7.00% - 7.15%||7.50% - 7.65%|
|Indian Bank||5.25% - 6.50%||5.75% - 7.00%|
|Indian Overseas Bank||5.75% - 6.75%||6.25% - 7.25%|
|PNB||6.70% - 7.00%||7.20% - 7.50%|
|Allahabad Bank||6.50% - 7.00%||0.00% - 0.00%|
|Andhra Bank||6.25% - 7.00%||6.75% - 7.50%|
|Bank of India||6.75% - 7.00%||7.25% - 7.50%|
|Bank of Maharashtra||6.50% - 6.80%||7.00% - 7.30%|
|Canara Bank||7.00% - 7.35%||7.50% - 7.85%|
|Central Bank of India||7.00% - 7.15%||7.50% - 7.65%|
|Dena Bank||6.50% - 7.25%||7.00% - 7.75%|
|Punjab and Sind Bank||6.60% - 7.10%||7.10% - 7.60%|
|State Bank of Hyderabad||6.50% - 6.95%||7.00% - 7.45%|
|State Bank of Mysore||6.50% - 6.95%||7.00% - 7.45%|
|State Bank of Travancore||6.50% - 6.95%||7.00% - 7.45%|
|UCO Bank||6.75% - 7.00%||0.00% - 0.00%|
|Union Bank of India||7.00% - 7.25%||7.50% - 7.75%|
|DBS Bank||5.00% - 8.00%||5.00% - 8.00%|
|Corporation Bank||7.00% - 7.10%||7.50% - 7.60%|
|Karur Vysya Bank||7.00% - 7.00%||7.00% - 7.50%|
|South Indian Bank||4.00% - 7.00%||4.50% - 7.50%|
|RBL Bank||7.00% - 7.85%||7.50% - 8.35%|
|Syndicate Bank||6.00% - 6.80%||6.50% - 7.30%|
|SBBJ||6.50% - 7.00%||7.00% - 7.50%|
|Tamilnad Mercantile Bank||5.00% - 7.00%||5.00% - 7.50%|
Recurring deposits, also known as RD are term deposits which allow people to make regular deposits and earn attractive interests on them. Account holders can choose the period of the deposits and even the amount to be deposited regularly. RD offers higher flexibility than Fixed Deposits and is therefore more apt for those individuals who earn regular income and are unable to make bulk deposits in one go. It inculcates a habit of saving among individuals across all income categories.
Recurring Deposits are offered by all banks in India. Interest rates are very competitive among banks, usually ranging around 6-7%, which are fixed for a tenure that is once decided, doesn’t change during the tenure. The tenure is as short as 7 days and can go up to 10 years. On maturity, the accumulated amount of the regular deposits along with the interest component is paid to the depositor.
Features of Recurring Deposit
The most notable features of RDs are as follows:
- Flexible mode of saving allows you to choose the amount you can save regularly which can be as small as Rs. 10.
- Allows you to choose the tenure of your savings as well, which can range from 7 days to 10 years.
- The rate of interest offered on RDs is at least as high as that of Fixed Deposits. Recurring deposit interest rates vary from 4.00% to 8.00%
- Minors can also open RD account under guardianship of parents.
- Senior citizens are eligible for higher rate of interest, usually 0.5% more than the other investors.
- Premature and partial withdrawals are allowed in RDs with some penalty.
- RDs can be used as collateral to obtain loans. Generally, the loan to value ratio is 80-90%.
Recurring Deposit Formula
Interest on RD is calculated quarterly by most banks. Compound interest is more beneficial to the depositor because he earns interest on the interest earned on the principal amount. The following formula gives the total amount received on maturity:M = R[(1+i)^n-1]/(1-(1+i)^(-1/3) )
M = Maturity Value
R = Monthly Installment
n = Number of quarters
I = Rate of interest/400
ILLUSTRATION: Suppose you want to buy a motorcycle a year from now and want to save money for it while earning interest over it. So you start by opening a RD account, depositing Rs. 5,000 per month for a year. Interest rate range from 4.00% to 8.00%. Let’s assume you get the highest RD rate of 8.00% on your deposits, compounded quarterly.
M= Maturity amount
R= in our case, it is Rs. 5000
i = 8.00/400
n= compounding frequency (since it is quarterly, it will be 4)
Using the above formula and values, we solve for M and get Rs. 62,647
So, you will receive amount of Rs. 62,647 after the maturity of the deposit after one year and the interest earned on the deposit is Rs. 2,647
Premature Withdrawal or Breaking of RD
The amount can only be withdrawn on maturity. In case of emergency you can break your RD before maturity by closing your account. The bank may deduct 1 or 2 percent as interest penalty from the interest accrued on your RD amount for the period for which the amount was with the bank.
The minimum lock in period is 3 months and if the depositor request a premature withdrawal before that, he earns zero interest and only the principal amount will be refunded to him. Apart from cancelled interest, any incentives offered are also withdrawn.
Partial Withdrawal of RD
Partial withdrawal is not allowed. However, some banks offer the facility to obtain loan or overdraft by keeping your deposit as collateral. On the other hand, premature withdrawals are allowed by post offices if you have an RD account with them for at least a year. The withdrawn amount is considered a loan, which has to be paid in lump sum.
Tax Exemption on Recurring Deposits
Earlier no tax was deducted on recurring deposit. With effect to 1st June, 2015, these deposits are subject to TDS (tax deducted at source) as per the income tax laws. However, no TDS would be deducted if the interest income earned does not exceed Rs. 10,000 in a financial year.
Tax is to be paid as per applicable slabs at the time of filing income tax return. If you have submitted Form 15G (in case of normal citizens) and 15H (in case of senior citizen) in the bank, your TDS will not be deducted (in case your total taxable income doesn’t come under tax slab).
RD for Senior Citizens
Senior citizens can also open a RD account. The rate of interest they earn is slightly higher than the regular deposits available to other citizens. Generally banks offer 0.25 percent to 0.75 percent more interest than normal RDs, compounded annually and the tenure and amount is fixed by banks. Indian residents and NRIs both can open this account.
Your age must be above 60 years on the date of opening the RD account.
Loan against Recurring Deposit
You can avail loan against your RD account by using your deposited amount as collateral. Generally banks provide 75 to 90 percent of the deposited amount as loan. However, the loan to value varies from bank to bank. For example- SBI gives 90% of the deposited amount as loan whereas Bank of Baroda gives 95% of deposited amount as loan. Loan against RD is a quick and instant loan that can be availed with nominal interest rates of 1-2% higher than that offered on your account.
Post office Recurring Deposit Scheme (PORD)
PORD is the systematic saving plan that offers guaranteed returns. The objective of PORD account is to provide assured return, compounded quarterly or monthly over a period of 60 months. It doesn’t offer any tax incentives, but it is preferred by small savers due to government backing.
Credit Rating: It does not require any commercial rating because it is offered by Government of India.
Exit Option: Penalty is charged in case of premature closing of account.
Other Risks: There is no risk associated with this investment and it is completely risk-free.
Where to Open an Account: You can open the account in any post office.
How to Open a PORD Account
Following documents are needed to open PORD Account:
- An account-opening form
- Two passport size photographs
- Address and identity proof such as the Aadhaar card, passport, PAN (permanent account number) card or declaration in Form 60 or 61 as per the Income Tax Act, 1961, driving license, voter’s identity card or ration card.
- Carry original identity proof for verification at the time of account opening.
- Choose a nominee and get a witness signature to complete the formalities and get started.
How to operate the account
- You need a pay-in slip with the initial account-opening sum to be credited to your account.
- Payment can be made in cash, by cheque, or by instructing the bank to transfer money to the PORD.
Many banks offer Flexi deposits that are a variant of RD in which a depositor can invest a varying or flexible amount of money in his account every month. In this kind of RDs, the depositor has to choose the core amount and the flexible installment amounts at the time of opening the account. This amount has to be in multiples of the core amount. For example, if the core amount is chosen to be Rs. 200, the periodic deposits will also be either of Rs. 200 or in multiples of that.
This account gives the flexibility and convenience to the depositor allowing him to deposit an amount he can comfortably spare every month. Interest payable is fixed for the core amount, and interest on the multiples is calculated based on the duration for which the additional funds have been deposited into the accounts.
Difference between Fixed Deposit and Recurring Deposit
|Fixed Deposit||Recurring Deposit|
|The purpose of an FD is to enable investors to mobilize idle savings and earn a higher rate of interest than regular savings bank accounts||The purpose of an RD is to inculcate a regular habit of savings among the public|
|The deposit is made in lump sum for opening an FD||RD account can be opened with a small sum in which regular deposits of fixed amount can be made every month|
|Tenure ranges between 7 days to 10 years in most of the banks||The tenure of RD ranges from 6 months to 10 years|
|Tax exemption under the Section 80C of Income Tax Act 1961 is applicable||No tax exemption is allowed on RDs. These are subject to TDS (tax deducted at source) for an interest income exceeding Rs. 10,000.|
|Premature withdrawal is allowed with a penalty||Premature withdrawal is allowed in RD with penalty and without penalty in some banks|
|Interest on fixed deposit can be paid quarterly, half yearly, annually or on maturity||The interest on RD is in most cases compounded quarterly|
Recurring Deposit Products
All banks offer RDs at attractive rates and tenures and a few of them offer products which are aimed at serving special needs. These are tabulated below.
|Bank name||Product name||Deposit Amount||Tenure|
|ICICI Bank||Croma delightful deposits
MakeMyTrip Holiday Savings Plan
Tanishq Jewelry Plan
Thomas Cook Holiday Savings Account
Rs. 5,000 or Rs. 10,000
Rs. 5,000 or Rs. 10,000
6 months or 12 month
6 months or 12 month
|SBI||Holiday Saving RD||
|Bank of Baroda||Samriddhi Quarterly Recurring Deposit
Samriddhi Half Yearly Recurring Deposit
Yatha Shakti Jama Yojna
|Central Bank of India||Cent Swa Shakti Flexi
Frequently asked questions on Recurring deposits
Indian residents and HUF (Hindu Undivided Families) can open RD account. NRIs can also open the RD account through NRO and NRE accounts.
Banks provide this scheme for minors as well, under the guardianship of parents to supervise their finances.What is the common tenure/duration of Recurring Deposits?
RD can be opened for minimum 6 months which can further be increased in multiples of 3 months that can go up to maximum tenure of 10 years. However, minimum tenure can be different for different banks. For example- minimum tenure for RD in SBI is 12 months whereas 6 months in ICICI Bank.What exactly happens on maturity of an RD account?
On maturity of your RD account, you can ask the bank to transfer the principal amount and the accumulated interest component directly into your linked savings account. You can also invest your amount in fixed deposits after maturity.What is the nomination facility in terms of an RD account?
Nomination facility is available in recurring deposits. Whether you open it in single name or joint name, only one nominee per account is permissible. You should ensure that the nomination is followed as per RBI rules. You can change the nominee through declaration in appropriate form.What provisions do we have in recurring deposits for NRIs?
Investment in RDs is one of the best options for NRIs and NREs. NRIs can invest in recurring deposits via two investment options:
NRE Accounts: In this option, the deposit installments are credited from the NRE (non- resident external account) account. An NRE account is a Non Resident External account whose accrued amount is tax exempt in India. It is also quite easy to move this account to the home country of the depositor.
NRO Accounts: In this, the deposit installments have to be credited either from NRE account or NRO (non- resident ordinary account) account. The interest from NRO deposits is taxable at the rate of 30%, plus the additional CESS. The amount can be taken to home country but it is subjected to certain requisitesHow do banks calculate the maturity amount?
The maturity amount is calculated by banks on the basis of the installment, account type and tenure chosen by the depositors.Do Senior citizens receive extra benefits on their Recurring Deposits?
Yes, generally banks in India provide an additional interest rate on Recurring Deposits to senior citizens.Can I withdraw my Recurring Deposit before the term is over?
Yes, you can withdraw complete amount before the term is over. However, banks generally do not permit partial withdrawal.What happens if installments are not paid?
If more than a minimum number of consecutive payments are not made, many banks will close the RD account. Some banks offer a more flexible form of an RD on certain terms, whereby you can deposit money any time you like.How do I apply for a regular recurring deposit?
You can visit your nearest branch and submit the Deposit Account form. Alternatively, you can call the customer care number for help with your query. You can also book an RD through Bank Netbanking account.