A Recurring Deposit (RD) account serves as an investment vehicle wherein individuals can systematically deposit funds every month, enabling them to accumulate savings over a predetermined duration. Investors have the flexibility to select the deposit term and the monthly contribution amount according to their preferences. RD schemes are known for their adaptability compared to fixed deposit schemes, making them a preferred choice for individuals looking to initiate savings and establish a financial safety net. The types of recurring accounts depends on the bank you choose to open the account with.
What is a Recurring Deposit?
Before venturing into opening a RD account it is crucial to understand what is recurring deposit account and how it works. Recurring Deposit (RD) is a preferred, low-risk investment tool in India offering flexible terms ranging from 6 months to 10 years with assured returns. Offered by various banks and NBFCs, RD enables monthly savings allocation for short or long-term financial goals. With the option to invest a minimum amount each month, it’s an excellent choice for individuals lacking a lump sum for short-term objectives, ensuring steady wealth growth.
Best RD Rates in 2023
The best RD rates offered by top banks are given below:
Name of the Bank | General Public Rate p.a. | Senior Citizen Rate p.a. |
HDFC Bank | 4.50% to 7.10/% | 5% to 7.60% |
ICICI Bank | 4.75% to 7.10% | 5.25% to 7.60% |
SBI | 5.25% to 7% | 5.75 to 7.50% |
Bank of Baroda | 6.50% to 7.05 | 7% to 7.55% |
PNB | 5.50% to 7% | 6% to 7.50% |
IndusInd Bank | 7% to 7.50% | 7.75% to 8.25% |
IDFC First Bank | 5% to 7.50% | 5.50% to 8% |
Canara Bank | 5.25% to 6.90% | 5.75% to 7.40% |
Yes Bank | 5% to 7.75% | 5.50% to 8.25% |
HSBC Bank | 4.50% to 7% | 5% to 7.25% |
Bank of India | 5% to 6.75% | 5.50% to 7.25% |
Union Bank of India | 4.40% to 6.70 | 4.90% to 7.20% |
The Best RD Rates of Small Finance Banks
Small Finance Banks offer the following rates for Recurring Deposits opened in their banks
Name of the Bank | General Public p.a. | Senior Citizens p.a. |
Ujjivan Finance Pvt Ltd | 5.50% to 8.25% | 6% to 8.75% |
Jana Small Finance Bank | 6% to 8.50% | 6.50% to 9% |
Unity Small Finance Bank | 5.75% to 7.65% | 6.25% to 8.15% |
Equitas Small Finance Bank | 7.25% to 8.20% | 7.75% to 8.70% |
Fincare Small Finance Bank | 5.75% to 8.25% | 6.25% to 8.75% |
ESAF Small Finance Bank | 5.25% to 8.50% | 5.75% to 9% |
Utkarsh Small Finance Bank | 6.50% to 8.50% | 7% to 9% |
Suryoday Small Finance Bank | 6.50% to 8% | 7% to 8.50% |
Shivalik Small Finance Bank | 5% to 8.10% | 5.50% to 8.60% |
AU Small Finance Bank | 4.25% to 8% | 4.75% to 8.50% |
Best RD Rates of Public Sector Banks
The best RD Rates of Public Sector Banks are given below
Name of the Bank | General Public Rate p.a. | Senior Citizen Rate p.a. |
Bank of Baroda | 4.50% to 7.05% | 5% to 7.55% |
Bank of India | 5% to 6.75% | 5.50% to 7.25% |
Bank of Maharashtra | 4.75% to 7% | 5.25% to 7.50% |
Canara Bank | 5.25 to 6.90% | 5.75 % to 7.40% |
Central Bank of India | 5.50 % to 7.15% | 6 % to 7.65% |
Indian Bank | 3.85% to 6.70% | 4.25% to 7.20% |
Indian Overseas Bank | 4.85% to 6.50% | 5.35% to 7% |
Punjab National Bank | 5.50% to 7% | 6% to 7.50% |
Punjab & Sind Bank | 5.50% to 6.50% | 6% to 7% |
Union Bank of India | 4.40% to 6.70% | 4.90% to 7.20% |
UCO Bank | 2.90% to 6.50% | 3.40% to 7uj% |
State Bank of India | 5.25 to 7% | 5.75% to 7.50% |
Best RD Rates For Private Sector Banks
The best RD Rates for private sector banks is given below:
Name of the Bank | General Public Rate p.a. | Senior Citizen Rate p.a. |
Axis Bank | 5.75 to 7.10% | 6.25% to 7.60% |
Bandhan Bank | 4.50% to 7.25% | 5% to 7.75% |
CSB Bank | 4.25 to 6% | 4.75% to 6.50% |
City Union Bank | 6% to 6.50% | 6.50% to 7% |
DCB Bank | 6.25% to 7.90% | 6.75% to 8.40% |
Dhanlaxmi Bank Ltd | 6.50 to 6.75% | 6.75% to 7.25% |
Federal Bank | 5% to 7.30% | 5.50% to 7.80% |
HDFC Bank | 4.50% to 7.10% | 5% to 7.60% |
ICICI Bank | 4.75%to 7.10% | 5.25% to 7.60% |
InduSind Bank | 7% to 7.50% | 7.75% to 8.255 |
IDFC First Bank | 5% to 7.50% | 5.50% to 8% |
Jammu & Kashmir Bank Ltd | 4.50% to 7.10% | 5% to 7.60% |
Karnataka Bank Ltd | 5.25% to 7% | 5.75% to 7.50% |
Karur Vysya Bank Ltd | 6% to 7% | 6.50% to 7.50% |
Kotak Mahindra Bank Ltd | 6% to 7.20% | 3.25% to 7.75% |
Nainital Bank Ltd | 4.95% to 6.25% | 5.45% to 6.75% |
RBL Bank Ltd | 3.50% to 7.80% | 4% to 8.30% |
South Indian Bank Ltd | 2.90% to 7.20% | 3.40% to 7.20% |
Tamilnad Mercantile Bank Ltd | 6% to 7% | 6.50% to 7.50% |
Yes Bank Ltd | 5% to 7.75% | 5.50% to 8.25% |
IDBI Bank Ltd | 4.50% to 6.80% | 5% to 7.30% |
Why Invest in an RD Account?
Term deposits, including fixed and recurring deposits, offer low-risk and profitable investment options. While fixed deposits require a lump-sum investment, recurring deposits cater to those with a steady income stream.
The advantages of RD accounts given below are the key reasons to consider recurring deposits:
- RD allows regular deposits, ideal for individuals without a substantial initial sum but can save consistently.
- RD interest rates match fixed deposits, guaranteeing better returns compared to savings accounts and other bank deposit schemes.
- Short-term deposit options are available, with periods as brief as 6 months.
- Opting for a recurring deposit offers the advantage of shorter lock-in periods, enhancing liquidity, and catering to short-term goal planning.
- Recurring deposits are a secure investment choice, unaffected by market fluctuations. Investors receive profits based on the agreed-upon interest rate at the time of enrollment.
How to Choose the Right Recurring Deposit?
It is a wise choice to open an RD account to create a financial safety net. However, choosing the right recurring deposit is imperative. Here are a few tips that will help you choose the right RD account.
- Select the right bank for your recurring deposit to ensure hassle-free services.
- Compare interest rates and terms across banks; rates vary between 5.5% and 7.5%.
- Align the RD tenure with your financial goals; banks offer tenures ranging from 6 months to 10 years.
- Choose your RD amount wisely to avoid financial strain; consider your monthly commitment.
- Avoid premature RD withdrawals to prevent penalties and maintain goal alignment.
- Some banks offer Flexi Recurring Deposits for increasing monthly deposits gradually.
- Ensure loan facility on RD is available for access to funds in case of emergencies.
- Check for the availability of nomination facility. Always nominate a beneficiary to safeguard your investment in case of unforeseen circumstances.
Benefits and Features of Recurring Deposit
The features of recurring deposits along with benefits are given below:
- Start an RD account with a minimum monthly investment of Rs. 100.
- RD tenure ranges from 6 months to 10 years.
- RDs offer higher interest rates compared to savings accounts and usually compound interest quarterly.
- RDs have a lock-in period of 30 days to 3 months, determined by the bank, with no interest for premature withdrawals.
- One individual can hold multiple RD accounts, and some banks and the Post Office allow advance deposits.
- Partial withdrawals are generally not permitted, but premature withdrawals come with penalties.
- Set up automatic deductions via standing instructions from your savings account.
- Senior citizens may enjoy an additional 0.5% interest rate.
- Minors can have RD accounts under parental/guardian supervision.
- Overdraft and loan facilities are available against RD balances.
How to Apply for Recurring Deposit Online?
You can open an RD account online with the following steps
- Access your net banking or mobile banking account.
- Navigate to the dashboard and choose ‘Recurring Deposit’ under the Deposits option
- Click on the ‘Open a Recurring Deposit’ option
- Provide details such as the source account number for instalment deductions, your preferred instalment amount, and the chosen period. Be sure to review the applicable interest rate and designate a nominee for the account proceeds.
- After confirming your agreement with the terms and conditions, click the checkbox.
- Submit your application.
- You will receive a confirmation message, and an email containing the RD details will be sent to your registered email address. The specified amount will be debited accordingly.
How to Apply for Recurring Deposit Offline?
- Approach the nearest branch of your bank where you are maintaining a savings account
- Collect Recurring Deposit Application
- Fill in the application with details including your name, contact address, email, mobile number, source account to debit the RD amount, instalment amount, tenure, nomination particulars, etc and submit the application.
- The application will be verified for accuracy of details and the account opened.
- The first instalment amount will be debited to the source account.
- A standing instruction can be set up for deducting the monthly instalments.
Recurring Deposit FAQ’s:-
Yes, a different amount each month will not be accepted. The amount agreed upon while opening the account should be remitted every month till the maturity of the deposit.
The tenure option available ranges from 6 months to 10 years.
Some banks offer a preferential rate of 0.50% for senior citizens,
Yes. You can avail loan up to 90% of the RD balances.
The minimum deposit stipulated for Recurring Deposits is Rs. 100