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On 30th August 2019 as per an announcement made by the Ministry of Finance, Allahabad Bank merged with the Indian Bank. The merger was completed on 1st April 2020 with Allahabad Bank becoming an anchor bank. This merger resulted in Indian Bank becoming the 7th largest nationalised bank in the country.

Currently, all products and services of Allahabad Bank are offered through Indian Bank. Recurring deposits or RDs are one of them, wherein customers can deposit a fixed sum periodically to receive lucrative returns. The Allahabad Bank RD interest rates are some of the highest rates offered under such schemes by banks across the country.

Factors that Influence Allahabad Bank RD Interest Rates

There are several factors that can contribute to the increase or decrease of interest rates offered by Allahabad Bank for its FD scheme. Some of the factors are as follows –

  • Inflation – During inflation, the RBI will increase the repo rate, which, in turn, will increase the lending rates of banks. Thus, borrowers will be paying more on their loans. As a result, banks will offer higher deposit rates to customers.
  • Downturn – In case of a downturn or recession, the RBI reduces the repo rates. As a result, loans become cheaper with lower lending rates. Thus, banks also lower the interest rates on deposits.
  • Deposit tenure – One of the factors that influence RD rates and which depositors can control is the tenure. Longer tenures generally offer higher interest rates and vice versa.

Apart from these, the age of an individual is also an important determinant of the bank’s FD rates, wherein senior citizens can enjoy higher returns.

Allahabad Bank RD Interest Rates for 2020

The RD interest rates in Allahabad Bank are listed below –

TenureStandard Rate of InterestRate of Interest for Senior Citizens
180 days to 269 days6.25%6.75%
270 days to less than 12 months6.25%6.75%
12 months to less than 24 months6.45%6.95%
24 months to less than 36 months6.35%6.85%
36 months to less than 60 months6.25%6.75%
60 months to 84 months6.25%6.75%

Depositors must, however, note that the above-given rates are subject to change frequently. It is, thus, crucial to be informed about the current FD rates to propagate better financial planning.

Allahabad Bank Recurring Deposit Eligibility 

Entities belonging to the following categories can open an RD account with Allahabad Bank –

  1. Individuals
  2. Hindu Undivided Families
  3. Non-resident Indians (NRIs)
  4. Minors (under a guardian/parent)

Apart from belonging to these categories, individuals will also have to submit a few documents to start a recurring deposit with Allahabad Bank.

Types of Allahabad Bank Recurring Deposits

Currently, the following types of RDs are offered by Allahabad Bank (as Indian Bank) –

1. Variable Recurring Deposit

The Variable Recurring Deposit from Allahabad Bank provides the option of making variable deposits each month. Meaning, an account holder can deposit as much as he/she wishes to according to the minimum and maximum deposit amount.

Some of the features of the Variable Recurring Deposit are –

  • Lock-in period of 36 months.
  • The initial deposit amount that has to be made is Rs.500.
  • Monthly deposit can be made in multiples of Rs.100 with the maximum amount being Rs.1 Lakh.
  • Interest is paid on or after the 10th of every month.
  • No penalty fee is applicable on delayed payment of installments.
  • Account can be foreclosed against a penalty charge.

2. IB Swarna Nidhi Recurring Deposit

The IB Swarna Nidhi Recurring Deposit enables account holders to purchase a gold coin after maturity. Customers will be able to avail of a discount of Rs.25 per gram on their purchase. They will also be eligible for a personal accident insurance policy of up to Rs.1 Lakh if the maturity amount is Rs.12,000 or more.

Few features of the IB Swarna Nidhi Recurring Deposit are mentioned below –

  • Tenure ranges between 6 months and 12 months.
  • Initial amount to be deposited is of Rs.500.
  • Minimum monthly installment is in multiple of Rs.100 with a maximum limit of Rs.1 lakh.

3. Standard recurring deposits 

Standard recurring deposits from Allahabad Bank have the following features –

  • The minimum monthly deposit is set at Rs.100 (differs with RD types) and in multiples thereof. There is no upper limit for deposits.
  • The minimum lock-in period is 6 months, while the maximum is 10 years.
  • The interest in Allahabad Bank recurring deposit is compounded every quarter.
  • Customers will be able to foreclose the account before maturity.
  • Facility for a loan against the deposit is available.
  • Deposit holders can nominate another individual.

How to Calculate Allahabad Bank RD Interest?

The returns on an Allahabad Bank RD is calculated using the following formula –

M = R x {(1 + i) n – 1} / 1 – (1 + i) – 1/3

Here,

  • M = Maturity amount
  • R = Monthly instalment
  • i = Rate of interest applicable
  • n = Tenure

Example: Aditi deposits Rs.5,000 per month in a recurring deposit account at Allahabad bank for 84 months (7 years). As per the interest rates mentioned above, she will receive an interest rate of 6.25%.

As per the formula –

  • R = Rs.5,000
  • i = 6.25%
  • n = 7 years

So,

A = 5,000 x {(1 + 6.25) 7 – 1}/ 1 – (1 + 6.25) (- 1/3)

A = Rs.522,386 (approx.)

The RD interest rate of Allahabad Bank can be calculated using a recurring deposit calculator. With this online tool, users only have to enter the monthly investment amount, lock-in period (in years), and the applicable Allahabad Bank RD interest rates.

This tool computes the total amount that a depositor will receive after maturity. Additionally, it not only enables an individual to calculate their returns but also aids to create an investment portfolio.

TDS on Allahabad Bank Recurring Deposit 

Applicability of TDS on recurring deposits is the same as FDs. A TDS of 10% will be applied if the total interest earned by an individual from all of his/her investments in a year is Rs.40,000 or above. In case of senior citizens, the limit is Rs.50,000.

Account-holders, however, have the option to save TDS by submitting Form 15G or 15H. However, they must meet a few conditions –

In case of Form 15G

  • Should be resident individuals or HUFs below the age of 60.
  • Income earned is not taxable.

In case of Form 15H

  • He/she should be resident individuals or HUFs above the age of 60.
  • Income earned, if any, must not be taxable as per tax slabs of senior citizens.

Even though the Allahabad Bank RD rates are attractive, depositors may come across a few disadvantages. One such drawback is the applicability of penalty charges in case of a delayed payment of installment for regular RDs. Individuals should, thus, check and consider all the limitations before opting for an RD scheme with the bank.

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