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Recurring Deposit (RD) Interest Rates

Recurring deposits are one of the best ways to save money every month. In fact, it helps to inculcate the savings habit. You must set aside money every month to save. You can opt for the tenure and the amount depending on your ability to save.

Comparison of Bank Recurring Deposit Interest Rates

Bank Name 1 Years 2 Years 3 Years 4 Years 5 Years 5+ Years
Post Office 5 Year RD NA NA NA NA 7.20% NA
Allahabad Bank 6.75% 6.60% 6.50% 6.50% 6.50% 6.50%
Andhra Bank 6.80% 6.80% 6.75% 6.75% 6.75% 6.50%
Axis Bank 7.10% 7.00% 7.00% 7.00% 6.75% 6.75%
Bandhan Bank 7.35% 7.65% 7.65% 7.65% 7.65% 7.65%
Bank of Baroda 6.45% 6.60% 6.45% 6.45% 6.45% 6.45%
Bank of India 6.50% 6.50% 6.50% 6.50% 6.50% 6.50%
Bank of Maharashtra 6.50% 6.50% 6.50% 6.25% 6.25% 6.25%
Canara Bank 6.70% 6.40% 6.40% 6.40% 6.00% 6.00%
Catholic Syrian Bank 7.00% 6.75% 6.75% 6.50% 6.50% 6.50%
Central Bank of India 6.65% 6.65% 6.45% 6.45% 6.45% 6.45%
Citibank 5.50% 6.00% NA NA NA NA
City Union Bank 7.35% 7.00% 7.00% 7.00% 7.00% 6.70%
Corporation Bank 6.80% 6.50% 6.50% 6.50% 6.50% 6.50%
DCB Bank 7.40% 7.80% 8.00% 7.75% 7.75% 7.25%
Deutsche Bank 7.35% 7.00% 7.25% 7.25% 8.00% NA
Dhanalakshmi Bank 7.00% 7.00% 6.50% 6.50% 6.50% 6.50%
Digibank by DBS 7.50% 6.75% 6.75% 6.75% 7.00% 7.00%
Federal Bank 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
HDFC Bank 7.00% 7.30% 7.30% 7.25% 7.25% 7.00%
ICICI Bank 6.90% 7.00% 7.30% 7.25% 7.25% 7.00%
IDBI Bank 7.10% 7.05% 6.90% 6.85% 6.85% 6.25%
IDFC First Bank 7.25% 7.25% 7.25% 7.20% 7.20% 7.20%
Indian Bank 6.75% 6.60% 6.75% 6.75% 6.90% 6.50%
Indian Overseas Bank 6.60% 6.75% 6.80% 6.80% 6.80% 6.80%
Indus Ind Bank 7.60% 7.75% 7.75% 7.35% 7.35% 7.25%
J&K Bank 7.30% 7.30% 7.30% 7.30% 7.30% 6.50%
Karnataka Bank 7.10% 7.10% 7.00% 7.00% 7.00% 6.50%
Karur Vysya Bank 7.10% 7.05% 7.00% 7.00% 7.00% 7.00%
Kotak Mahindra Bank 7.00% 7.00% 7.00% 6.90% 6.75% 6.50%
Lakshmi Vilas Bank 7.75% 7.85% 7.85% 7.85% 7.85% 7.85%
Oriental Bank of Commerce 6.85% 6.75% 6.75% 6.70% 6.75% 6.75%
Punjab and Sind Bank 7.00% 6.80% 6.80% 6.55% 6.55% 6.55%
Punjab National Bank 6.75% 6.75% 6.75% 6.50% 6.50% 6.50%
Ratnakar Bank 7.90% 8.00% 7.60% 7.60% 7.60% 7.60%
Repco Bank 7.70% 7.70% 7.00% 7.00% 7.00% NA
South Indian Bank 7.30% 7.30% 7.30% 7.25% 7.25% 7.25%
Standard Charted Bank 7.20% 7.20% NA NA NA NA
State Bank of India 6.80% 6.70% 6.60% 6.60% 6.50% 6.50%
Syndicate Bank 6.50% 6.70% 6.50% 6.50% 6.50% 6.50%
Tamilnad Mercantile Bank 7.25% 7.00% 7.00% 6.90% 6.90% 6.90%
UCO Bank 6.60% 6.50% 6.50% 6.50% 6.50% 6.50%
Union Bank of India 6.75% 6.60% 6.60% 6.70% 6.70% 6.70%
United Bank of India 6.25% 6.25% 6.25% 6.00% 6.00% 6.00%
Yes Bank 7.25% 7.75% 7.75% 7.25% 7.25% 7.25%

How do recurring deposits work?

RDs or recurring deposits are the most simplest form of investments.

Let us say that you want to invest Rs 1000 every month. You can either open an account online or you can walk into any of the branches of a bank. If you opt for paying Rs 1000 every month after the 12th month, you would get Rs 12,000, plus accumulated interest.

You can choose a size of your amount or you can decide a lumpsum which you require at a future date. Say for example, you require a lumpsum amount after 1 year of Rs 1 lakh. Therefore, you can save Rs 8000 each month and the bank would also give you an interest on the same.

Is there a TDS on recurring deposits?

Yes there is a TDS that is applicable. In fact, the interest amount is very much taxable, like a bank deposit. Any interest over and above Rs 10,000 will attract a TDS. The tax deducted at source would be 10 per cent, just like bank deposits.

Why you should opt for RDs?

Recurring deposits are the best way to save for the future. For example, if you anticipate marriage 2 years down the line, you can start putting in RDS for the nest 24-months. By the end of the tenure you would receive a lumpsum to meet expenses.

If you have gathered a decent sum after 1 year, you can place the same in a fixed deposit and continue your RD a fresh. You will not believe the amount you can save. Do not forget the interest component.

We suggest that you take a more longer term tenure of say 2 years at the very least.

FEATURES OF RECURRING DEPOSITS(RD)

- Recurring deposit is one of the best product to offer an applicant with regular income to grow up their saving through the deposit of fixed amount every month to earn attractive interest.

- FD is highly rigid and it is for a long period as compared to RD. RD gives more flexibility to all the individuals who earn monthly income.

- RD is the perfect saving opportunity for all the individuals with all income categories.

- Almost all the banks of India offers RD account with competitive interest rates.

- At the time of maturity, monthly deposits and interest rates are earned by the applicant.

- Investors for whom 1% of the deposit rate of the bank is paying on the RD are eligible for tax relief on RD only if they invest through India Post.

- In case of emergency, the applicant can break RD before maturity but after that, the account will be closed.

- Premature withdrawals are only granted by post offices if the applicant has an RD account with them for at least 1 year.

- Maturity depends on the monthly deposits and duration you make in RD.

- The RD account will be permanently deactivated or closed if the applicant fails to pay the amount for the consecutive months. The account remains closed until the applicant pays the outstanding amount.

- In RD the interest rates offered by small finance banks are generally higher as compared to commercial banks and post offices. 

OTHER DETAILS

- Most of the small finance banks offer interest rate from 5.60%-9.60% per annum on RD.

- As compared to other banks SBI has lowered the interest rates of RD on a medium-term and long-term basis. SBI interest rates start from 6.4%-7% and a further 0.50% points hike for senior citizens only.

- Applicants who have opened their RD account in the post office are allowed to make one withdrawal up to 50% of the balance after one year. But this withdrawal should be repaid in lump-sum amount along with the interest amount with no time limit.

- The applicant who has RD account in post office will get an annual interest of 7.3%.

DOCUMENTS REQUIRED

- KYC documents if needed.

- Identity proof: Aadhar/PAN/ Driving License

- Application form of the bank to open an RD account

- Passport size photographs of the applicant.

BENEFITS

- A flexible method of monthly deposits of a minimum of Rs 10/-

- Passbooks are issued.

- TDS is deducted if the interest earned on RD exceeds Rs 40,000 a year.

- The minimum period of deposit 12 months and maximum 10 year

- Nominee facility available

- Rate of interest is available

- RD is helpful to take loan up to 90% against the balance in RD account.

 TENURE, PROCESSING COST AND INTEREST RATES

  • Normally the tenure is a minimum of 6 months to a maximum for 10 years.
  • Only the first instalment will be debited on the same day and no other charge will cost in online RD.
  • Average interest rates:- 6.00% to 8.25% (Depends on the bank).

PROS OF RD

- Flexible Recurring Deposit Schemes allow deposits of any amount at any time.

- Safe investment option with guaranteed returns

- Most of the banks offer RD products through net banking, Investors can make a deposit online without any hassle.

CONS OF RD

-RD is not flexible, the applicant will not be able to change the monthly investment amount.

- Withdrawals from a Recurring Deposit Account before the end of tenure may attract a penalty or lower the interest rates. Also, instant withdrawals may not be possible in case of a financial emergency.

- Interest Rates are low when compared to the Fixed Deposit. Applicants get a rate of up to 9% for Fixed Deposits whereas it varies from 7.5% to 8% for Recurring deposits.

- Recurring Deposits offer guaranteed but low returns when compared to other popular investment schemes like Mutual Funds and SIPs.

RD FOR NRI's

Investment options for NRI applicants might be NRE Contractual deposit or NRO deposits contractual. Let's see what those means and what are the offers for NRI

NRE RD Accounts- The NRE account must be used only to invest in your deposit instalments. NRE is external accounts that are non-resident. NRE RD interest is tax-free in India and can be recover without any charge.

NRO RD ACCOUNTS- For these accounts investment in deposit instalments may emerge from either NRE or NRO accounts. NRO is ordinary non-resident accounts. NRO RD interest is taxable at a rate of 30%, plus the additional CESS. This can be recovered subject to certain requirements.

WHICH ONE IS GOOD NRE RD or NRO RD

The source of investment is therefore a determining factor in which you can get an option to choose between NRE and NRO.

For instance, if your funding comes from an overseas origin then you should prefer NRE RD. Whereas you can put the same into NRO RD accounts if you receive your regular rental payments or any other source of income in India.

BENEFITS OF RD TO NRI APPLICANTS

  • While interest rates reach a pinnacle and then goes down, it is likely the right time to place investments into some good debt tools which may be another important factor considering RD investments.
  • Another unique feature of an RD account is that the monthly payments are not too high and that you can get benefits from the same rates as for the FD's without having to spend the entire amount in advance.
  • If one or two of your instalments have been missed due to certain restrictions, your deposit will be due for payment at the time of maturity.
  • The same RD will mature when the contractual term is completed, even if some of the instalmemts payments remains pending.
  • The current maturity will differ from the amount specified in the deposit advisory. That's because you haven't paid all your instalments.
  • Some banks charge penalties for instalments that are delayed or missed, but most banks don't.

INTEREST CALCULATION OF RD FOR NRI

  • The RD interest rates are calculated as per the Bank Associations guidance in India.
  • The interest rate for both NRE RD and NRO RD are the same as for NRE FD and NRO FD.
  • The interest rate on deposits is calculated every quarter at the applicable rates. Another stage is that, once the deposit instalments have been resolved, it remains so without any changes to the subsequent date.

IMPORTANT POINTS FOR NRI BEFORE INVESTING IN RD

  • For NRI RD have nomination and joint account facility.
  • The RD instalments depends on the opening date of the account.
  • RD doesn't allow partial instalment payment.
  • The minimum and maximum lock-in period for NRE RD is 1 to 10 years. If in case one prematurely terminates his/her RD within 1 year then the applicant will return their respective principal amount without interest. As the interest is only applicable on maturity.

 FAQs

 IS RD TAX AVAILABLE?

Yes TDS is charged in RD for both banks and post offices. It has been raised from Rs 10,000 to Rs 40,000 according to the Interim Budget proposals for 2019-20.

WHICH IS BETTER RD OR SIP(Systematic Investment Platform)?

RD is good but premature withdrawal will affect penalty charges. But in terms of SIP, it can be closed anytime and the money can be withdrawn without any penalty charges.

CAN RD BE EXTENDED?

The applicant can only extend his account only if he/she will pay 60 monthly instalments for 5 years. However, it will be considered as a fresh account and no extra charge has to provide by the applicant. 

HOW TO OPEN RD IN POST-OFFICE?

The minimum amount needed for opening a post-office RD is Rs 10/month or any amount in multiples of Rs 5 but the tenure of investment will be 5 years. The applicant can open an RD account by visiting any of the nearest post-office. 


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