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Recurring Deposits Interest Rates

Recurring Deposits are a kind of term deposit where individuals can make regular monthly deposits for a fixed tenure, thus saving for the long term. Once the period of deposit comes to an end, the individual stands to receive the principal invested, along with the interest earned on it. RD schemes generally provide more flexibility as compared to regular FD schemes, and are usually preferred by those looking to save money and build a contingency fund.

Nearly all the banks in India provide users the facility of opening a [recurring deposit)(https://www.coverfox.com/personal-finance/recurring-deposit/) account. The interest rates on RDs are highly competitive and are, on an average, 6-7%. Once the account has been opened and the individual starts investing, the interest will remain constant for the entire duration of investment. The tenure can be anywhere from 7 days to 10 years. RD schemes are generally a preferred option for salaried individuals who earn a fixed income each month and are able to invest a regular sum every month.

Interest Rates offered by Banks for Recurring Deposits

The interest rates offered by different banks on recurring deposits are as follows:

Bank NameInterest RateSenior Citizen Interest Rate
Allahabad Bank6.25% to 6.75%6.25% to 6.75%
Andhra Bank6.25% to 6.85%6.75% to 7.35%
Axis Bank6.25% to 6.75%6.5% to 7.25%
Bandhan Bank6.5% to 7.5%7% to 8%
Bank of Baroda6.25% to 6.9%6.75% to 7.4%
Bank of India6.50% to 6.70%6.50% to 6.70%
Bank of Maharashtra6% to 6.25%6.5% to 6.75%
Bharatiya Mahila Bank6.5% to 7%7% to 7.5%
Canara Bank6% to 6.5%6.5% to 7%
Central Bank of India4.75% to 6.6%5.25% to 7.1%
City Union Bank6.7% to 7.1%6.95% to 7.5%
Corporation Bank6.65% to 6.75%7.15% to 7.25%
DBS Bank5.75% to 6.7%5.75% to 6.7%
Dena Banke6.5% to 7%6.5% to 7%
Deutsche Bank6% to 7.5%6.5% to 7.75%
Dhanalakshmi Bank6.5% to 6.6%7% to 7.1%
DHFL Bank7.75%7.75%
Federal Bank6.5% to 7%7% to 7.5%
HDFC Bank5.75% to 6.75%6.25% to 7.25%
ICICI Bank6.0% to 6.75%6.5% to 7.25%
IDBI Bank6% to 6.65%6.5% to 7.15%
Indian Bank4.5% to 4.75%5% to 6.25%
Indian Overseas Bank5.75% to 7.25%6.25% to 7.75%
IndusInd Bank6.5% to 6.85%7% to 7.35%
Jammu and Kashmir Bank6.5% to 6.75%7% to 7.25%
Karnataka Bank6.5% to 6.9%7% to 7.40%
Karur Vysya Bank6.75 to 7%6.75 to 7.5%
Kotak Mahindra Bank6% to 6.6%6.5% to 7.1%
Lakshmi Vilas Bank7%7%
Nainital Bank7.50% to 7.90%8.00% to 8.40%
Oriental Bank of Commerce6.5% to 6.85%-
Punjab and Sind Bank6.40% to 6.80%7.10% to 7.30%
Punjab National Bank6.25% to 6.75%6.75% to 7.25%
Saraswat Bank6.80%7.05%
South Indian Bank6% to 6.75%6.75% to 725%
State Bank of India6.25% to 6.75%6.75% to 7.25%
Syndicate Bank6.5 to 6.6%7 to 7.1%
Tamilnad Mercantile Bank5% to 7%7% to 7.5%
UCO Bank6.25% to 6.5%6.25% to 6.5%
Union Bank of India6.8% to 7%6.8% to 7%
United Bank of India5.75% to 6.25%5.75% to 6.25%
Vijaya Bank6.25% to 6.5%6.75% to 7%
Yes Bank7% to 7.10%7.50% to 7.6%

Source: economictimes.indiatimes.com/wealth/interest-rates/recurring-deposit-rates/rdinterestrate.cms

Note: Recurring deposit interest rates are subject to change anytime as per Bank’s discretion. Please visit the official website of the bank to view the latest interest rates on recurring deposit schemes.

Documents Required to Open RD Account

An individual will have to submit an ID proof and an address proof in order to open an RD account with a bank. The kind of documents that are generally accepted are:

  • Identity Proof: Passport, PAN card, Government ID card, Photo Ration card, Voter ID card,Driving Licenceand Senior citizen ID card.
  • Address Proof: Passport, Electricity Bill, Telephone Bill, Bank Statement with Cheque and Certificate/ ID card issued by Post office.

How is RD Interest Calculated?

A number of factors are taken into consideration while determining the interest rate. The amount that has been deposited into the RD account and the tenure of the deposit are some of the elements that the bank takes into account. The interest on a recurring deposit account is generally calculated on a quarterly basis, and will vary from bank to bank.

Individuals can use theRecurring Deposit Calculatorto find out the interest on an RD account. This is an online tool provided by most banks on their websites where users can calculate the maturity amount (principal and interest) that they stand to receive on parking their money in the bank's RD scheme. Before depositing any amount in an RD account, individuals are advised to make use of this online facility. They can compare the maturity value of the deposited amount with different banks and take an informed call about which bank to select.

Tax on Recurring Deposits

The interest earned on recurring deposit is taxable, and has to be added to ‘income from other sources’ while filing IT returns. A TDS of 10% is deducted on the interest accrued on a RD account, if the total interest is greater than Rs. 10,000 in a single financial year. In case the interest does not surpass Rs. 10,000, then there will be no TDS deduction.

If the accountholder's total income does not fall under the tax slab, the individual can submit Form 15G (for normal citizens) or 15H (for senior citizens) to the bank. Both of these forms - which are valid for one financial year - serve as a self-declaration for seeking non-deduction of TDS on interest income.

Premature Withdrawal of Recurring Deposits

In case of premature or partial closure of RD account, the interest paid will be as per interest rate applicable for the duration during which the deposit was kept with the bank, subject to penal rates as applicable. An essential point to be noted is that many banks do not permit partial withdrawal of funds.

FAQs on RD Interest Rates

Which bank gives high RD interest?

The interest rate offered by banks in the country will keep changing from time to time. Yes Bank, Union Bank of India, Saraswat Bank and Union Bank of India are some of the banking institutions that offer competitive interest rates on recurring deposits. Before investing, please visit the website of the bank to view the final interest rates on recurring deposit schemes.

Which is better RD or FD?

Fixed deposits and recurring deposits are both fixed income products where banks pay a fixed interest on the invested amount. It has generally been observed that fixed deposits earn slightly more than recurring deposits. The choice between the two, however, must involve factoring in the ability to keep up with payments. While an FD can earn more, it is not feasible for a single product to meet all needs of the individual. In case one does not have a lump sum amount to invest right away, then the user can save a defined amount from his or her income every month by choosing the recurring deposit route. But if the individual has the capacity to make a lump sum investment, then FD is a better choice.

What is RD interest rate in post office?

According to the website of India Post, the interest applicable on a 5-Year Post Office Recurring Deposit Account (RD) is 7.3% per annum (quarterly compounded). The minimum amount an individual will need to invest per month is Rs. 10.

How is interest on RD calculated?

To calculate the interest on RD, the bank will take into consideration certain elements like the amount that an individual would like to deposit and the period of that deposit. The interest on RDs is generally calculated on a quarterly basis, and will vary from bank to bank.