Recurring Deposit (RD) is a type of financial deposit scheme wherein you are required to pay a fixed amount of money in the bank at fixed intervals of time. You can think of it as an investment scheme, which helps you inculcate the habit of saving money from your regular source of income and compound it at a fixed rate of interest for a long time. Here, you are going to get assured returns, compounded on a lump sum amount accumulating after a long term (say 5 years). In this article, we will understand everything you need to know about recurring deposits and RD interest rates.
Recurring Deposits Interest Rates Overview
The RD interest rates offered by banks depend on various factors like which category the depositor falls under and the tenure of the scheme. Most financial institutions offer a higher rate of interest to senior citizens.
There are many types of recurring deposit schemes available nowadays. Apart from that standard scheme, there are some additional special schemes that are made for people to help fulfil their financial objectives. Given below is a tabular overview of the features of a recurring deposit:
RD Feature Name | Relevant Feature |
Minimum Deposit | ₹ 10 – ₹ 500 (depends on the bank) |
Rate Of Interest | 2% – 8% (depends on bank) |
Interval of Rate Calculation | Mostly quarterly |
Range of Tenure | 6 months – 10 years |
Partial Withdrawal | Not allowed |
Also Read: Post Office RD Interest Rate
Recurring Deposit Interest Rates Comparison of Banks
The following table shows the RD interest rates for a few banks in India as of August 2022.
Bank | RD Interest Rates (General Public) | RD Interest Rates (Senior Citizens) |
HDFC | 3.75 to 5.75% | 4.25 to 6.50% |
ICICI | 3.75 to 5.75% | 4.25 to 6.50% |
SBI | 5.30 to 5.50% | 5.80 to 6.30% |
Axis bank | 4.65 to 5.75% | 4.90 to 6.50% |
Bandhan Bank | 4.50 to 6.50% | 5.25 to 7.25% |

How to Calculate Interest Rate for Recurring Deposit Scheme?
RD interest rates can grow your money depending on various factors like the amount deposited, tenure and the rate of interest. The final maturity amount can be calculated using the formula mentioned below:
M = R [(1+i) n – 1]/ 1 – (1+i) -1/3
Where, M = maturity value; R = monthly instalment; n = number of quarters;
i = rate of interest/400
Using the above formula, you will get a rough idea of how much you may earn depending on the choice of your deposit amount and the tenure of maturity. You will notice that the longer the tenure, the better your returns from the scheme. It is recommended to invest in RD for a tenure longer than 2 years to unleash its wealth-creating potential.
Also Read: What is Fixed Deposit?
Tax on Recurring Deposit Interest Rates
Now that we know how to calculate RD interest rates let us talk about the tax imposed on it. A tax of 10% is deducted by the bank if the income (amount of interest gained on the total matured amount) exceeds ₹10,000. If the income gained is lower than that, you can easily save a tax deduction.
Types of Recurring Deposit Interest Rates
Here are the different types of RD schemes available:
Regular Savings Scheme
The regular RD scheme is offered by most banks and NBFCs. Anyone above the age of 18 is eligible to open an account. You just need to choose the deposit amount and the tenure, which may vary with the banks.
Junior RD Scheme
A lot of banks also allow individuals below the age of 18 years to open an RD account under the supervision of a guardian. Parents can use this money to invest in their children’s education. The returns gained under this scheme are usually similar to or higher than a regular RD scheme.

Senior Citizens RD Schemes
The RD interest rates offered to senior citizens are higher than the regular rates. The interest under this RD scheme is compounded quarterly.
NRE/NRO RD Schemes
Most banks provide Non-residential Indians with an option to open an RD with NRE/NRO recurring deposit account. In an NRE or Non-resident external account, the interest accrued is free from taxes. Moreover, this account can be easily moved to the investor’s home country. In the case of NRO or Non-resident ordinary account, the interest earned is taxable at the rate of 30%, plus there is an additional CESS as well. This is repatriable and subject to featured requisites.
Special RD Schemes
Banks these days offer specially customized RD schemes to suit the requirements of a variety of people. For example, ICICI bank offers the iWish deposit, which allows individuals to contribute different amounts of money to their RD accounts.
Also Read: Senior Citizen Fixed Deposit Interest Rates
Key Features of Recurring Deposit (RD)
Recurring Deposit Interest Rates depend upon the finance-providing institution where you have to open a Recurring Deposit account. The RD interest rates can vary from bank to bank. Other than that, there is a lot more to know about the benefits of RD in wealth creation.
- The joy of investment in a risk-free condition can be obtained starting from a deposit amount as low as ₹ 10.
- It has a flexible tenure ranging from 6 months up to 10 years. One thing to keep in mind is that if you select a time period for your RD maturity, you are not allowed to withdraw money in between.
- Some banks provide you with an overdraft facility or a loan against the deposit as collateral. This becomes a risky affair since you have to pay the loan amount in a lump sum to avail partial withdrawal of the deposit. Therefore, it is recommended not to opt for partial withdrawal even if the option is available in the bank.
Currently working on a salary basis, if you wish to start your own business soon, but don’t have the capital to invest, RD is the perfect solution for you to grow a lump sum capital for your dream start-up!
Also Read: Difference Between FD and RD
Benefits of Recurring Deposit Investment
Recurring Deposit is a great way to save money regularly while gaining interest on it till it matures. This aids in wealth creation. The following are the benefits of RD:
- This is the best capital-growing option for people with a fixed salary as the only source of income. It inculcates a habit of saving money regularly, which can be used in the future as a lump sum.
- RD interest rates in banks might differ but will not change once an investment has started. RD interest rates are not subject to market swings, and, therefore, you can be assured of your rate to stay fixed for the entire tenure of the Recurring Deposit.
- RD interest rates and the deposits being as low as ₹10 serves as an encouraging medium of risk-free investment with assured returns, especially for middle-class families.

Different Types of RD Products
Anyone who can produce a valid proof of identity above the age of 18 can be eligible to open a Recurring Deposit account. Children below the age of 18 would need the permission of a supervising guardian through whom the RD can be created.
Here is a list of some banks offering different types of RD products:
Banks | RD Products |
ICICI | – Croma Delightful Deposits – Tanishq Jewelry Plan – Thomas Cook Holiday Savings Plan – MakeMyTrip Holiday Savings Plan |
SBI | – Holiday Saving RD |
Central Bank of India | – Yatha Shakti Jama Yojna – Samriddhi Half Yearly Recurring Deposit – Samriddhi Quarterly Recurring Deposit |
Bank of Baroda | – Cent Lakhpati – Cent Swa Shakti Flexi – Cent Millionaire |
Conclusion
As an RD scheme requires you to make regular investments, it creates a habit of saving money. The RD interest rates offered by banks and POs differ in terms of tenure also. The more you invest in an RD, the better would be your returns. It is important to first do your research and choose the best RD interest rates offered by competitive banks for a suitable tenure for max returns.
So, go and open a recurring deposit account today for future plans!
FAQs on Recurring Deposit Interest Rates
If you wish to open an RD account in the same bank where you currently hold an account, you have the option available in your net banking app or you can apply for an RD account by visiting the bank’s official website.
When the maturity date arrives, the lump sum final amount will be automatically credited to your bank account with a notice about the same.
The answer is yes, a nominee is needed for such kinds of schemes and can be changed anytime before the maturity date by producing proper relevant documents for the same.
Generally, the RD interest rate and the calculation of the matured amount are upon the assumption that you will deposit a fixed amount every month. If you miss one, the bank might put the penalty interest for the whole month or ask for a cash penalty, which can be a portion of the monthly deposit. The end amount would be affected either way. Even if the bank does not charge you for missing a deposit, the final amount will be affected.
In cases like when there are as many as 6 missed deposits, the bank has the right to close that RD account until the outstanding amount is repaid.
In case of premature account closure or withdrawal of the deposited amount, banks have different procedures to charge the account holder as a form of penalty. For a bigger deposit amount, banks can charge up to 1% of the total amount as a penalty for premature account closure.
The maturity amount depends on the tenure of the investment and the interest rate offered by the banks.
If the investor does not pay the deposit amount for consecutive months, their RD account will be deactivated or closed until the outstanding amount is paid.
At the time of maturity, the account holder is paid the principal amount along with interest earned during the tenure of the Recurring Deposit.
The following entities are eligible to open an RD account:
– Any individual
– Any minor who is above the age of 10 can open an RD account after providing proof of name
– Any minor below 10 under the guardianship of a legal guardian
– Any corporate, proprietorship or commercial organisation
– Any government organisation