What is Recurring Deposit?

A Recurring Deposit (RD) is a unique term-deposit which is offered by Indian Banks. It is an investment where people make regular deposits and earn decent returns on their investment. It is very flexible investment for users and individuals Due to the regular deposit factor and an interest component.
However, RD is different from Fixed Deposit/FD. RD is more flexible compare to FD in most aspects. In RD individual can choose to invest a fixed amount each month while earning decent interest on the amount. RD is a best saving cum investment instrument or option for individual.
Mostly all Indian banks offer Recurring Deposit Accounts, with a term that often ranges between 6 months to 10 years, where individuals have the opportunity to choose a term according to their needs. When Interest rate is fixed once in RD, it does not change during the tenure and on maturity. On maturity individual will be paid a lump sum amount which includes the regular investments as well as the interest earned.

    Types of RD Account In India

    Recurring deposits are available in various types with different financial plans as per individual needs, below are some recurring deposit types that are provided by banks in India.

    Regular Recurring Deposit Account

    This RD scheme is available in most of the Indian Banks and NBFCs. One can open an account if he/she has attained 18 years of age. To open an account, you have to choose a recurring amount and a tenure. Interest is calculated either on a simple or compound basis. No additional money can be deposited during the ongoing tenure; the lump sum can be withdrawn at the end of the tenure. The minimum deposit amount and the offered tenures vary from bank to bank.

    RD Account For Minors

    This is for individual below 18 Years, some Banks allow open an RD account for individuals under 18 years of age under the supervision of their parents or guardians. The returns or maturity can be same or different under this scheme.

    Senior Citizens Recurring Deposit Account: 

    This scheme is available for senior citizens, in this scheme Most of the Banks provide a higher rate of interest to senior citizens compare to regular rates. In this scheme the minimum investment amount and the tenure are set by the Bank. The rate of interest is higher than the regular RD interest rate.

    Tax Saving Recurring Deposit Account:

     As per Gov rule The interest earned on a recurring deposit account is taxable depends upon the interest amount. The amount of Tax Deductible at Source (TDS) is depend on the income per annum of the depositor.

    Who Provide Service of Recurring Deposit

    In India Banks, Financial institution, NBFC’s and Post Offices provide service of recurring Deposit.

    How to Apply for Recurring Deposit

    You can apply online or offline for RD by visiting Banks/NBFC’s/Post Office, Website for online and their branch for offline.

    Requirements for Recurring Deposit

    You need 1 passport size photo with self-attested PAN card copy and 1 address proof like Aadhaar card, Voter Id etc.

    Benefit of RD

    • It is safe to compare to other investments
    • You get flexible tenure up to 10 years
    • There is no limit for the maximum deposit 
    • Senior citizen gets additional interest rates.
    • Return on RD is assured 
    • RD can be easily renewed 
    • There is no effect on RD rates or return of market fluctuation