Canara Bank, established in 1906 and nationalized in the year 1969, is one of the largest public sector banks under the Government of India. The Canara Bank Recurring Deposit is one of the most popular investment schemes offered by the bank which allows individuals to build a significant savings corpus through monthly deposits.
With recurring deposits, individuals can deposit a fixed percentage of their income every month and earn interest at the applicable rate on the deposited amount. This amount then matures on a fixed date in the future after the tenure of the deposit is complete.
Headquartered in Bengaluru, Canara Bank is one of the oldest public sector banks in the country owned by the Government of India. Moreover, being one of the oldest banks, Canara bank RD interest rates are on par with other major banks with an added advantage of minimum deposits starting from as low as Rs. 50.
In this article
- Canara Bank RD Interest Rates
- Premature Withdrawal Facility on Canara bank RD
- How is the Maturity Amount Calculated on RD Investment?
- Eligibility Criteria for Canara Bank Recurring Deposits
- Documents Required to Open a Canara Bank RD Account
- Canara Bank Recurring Deposit Tax Benefits
- Types of Canara Bank RD Account
- Benefits of Opening a Canara Bank RD Account
- How to Open a Canara Bank RD Account?
- Canara Bank RD Interest Rates – FAQs
Canara Bank RD Interest Rates
Given below is the updatedCanara Bank RD Rates in a tabulated form.
|Tenure||RD Rates for General Citizens||RD Rates for Senior Citizens|
|180 days – 269 days||4.45%||4.95%|
|270 days – 364 days||4.45%||4.95%|
|1 year 1 day – 1 year 364 days||5.20%||5.70%|
|2 years – 2 years 364 days||5.40%||5.90%|
|3 years – 4 years 364 days||5.50%||6.00%|
|5 years – 7 years 364 days||5.50%||6.00%|
|8 years – 10 years||5.50%||6.00%|
Key Features of Canara Bank Recurring Deposit Interest Rates
- Canara Bank’s RD interest rates go up to 5.50%
- The interest rates are compounded quarterly
- Canara bank accepts minimal deposit starting from as low as Rs.50
- The minimum amount can be deposited in the multiples of Rs. 50
- Senior Citizen can avail RD rates up to 6.00%
- Any member of the family or spouse can be nominated to receive the final amount.
- Loan facility up to 90% of the available accumulated balance is available
Premature Withdrawal Facility on Canara bank RD
Canara Bank allows the option of Premature withdrawals but is subjected to a penalty of 1% rate if the account was opened on or after 4th February 2011.
Penalty for Delayed Instalment Payment
- Individuals will be charged a penalty of Re. 1 for missed payment on every Rs. 100, per month, for an RD account of less than 5 years. For RD accounts of more than 2 years, the penalty charged will be Rs. 2 for every Rs. 100 instalment.
- If an individual defaults payment for more than 4 instalments, the RD account will attract a simple interest rate to be paid every month.
How is the Maturity Amount Calculated on RD Investment?
The maturity amount is the lumpsum amount one gets after the required RD tenure is over. You can determine the interest you have earned with the help of this amount. An RD calculator immensely helps you in calculating the required interest. However, below given is the formula to calculate the interest on your deposit:
A = P*(1+R/N)^(Nt)
Where ‘R’ is the rate of interest, ‘P’ is the principal deposited, ‘n’ gives the tenure in months and ‘t’ is the applicable tenure.
Eligibility Criteria for Canara Bank Recurring Deposits
- Canara Bank RD account can be opened by any individual, joint account, guardian of a minor, Hindu Undivided Family (HUF), a proprietorship firm, a company, an association, a trust or any institution, given that they fulfil the eligibility criteria.
- Non-resident Indians are also eligible to open RD account provided they do it through NRE or NRO accounts.
- Minors can open an RD account under the supervision of parents or legal guardians.
However, there are certain factors that need to be kept in mind before opening an RD account in Canara bank:
The deposit amount: A Canara bank RD account can be opened with as low as Rs. 50 for a fixed term without any cap on the maximum amount.
Tenure of Deposit: An RD account in Canara bank can be opened for a minimum time period of 6 months to a maximum of 10 years, in multiples of three.
Rate of Interest: Depending on the investment amount and the account term, Canara Bank compounds the interest on a quarterly basis. However, individuals above 60 years get an additional 0.50% interest rate above the regular rates for individuals below 60 years of age.
Documents Required to Open a Canara Bank RD Account
- Bank’s prescribed application form
- Pand Card copies or Form 60/61 (in case you don’t have a pan)
- 2 passport size photos of the applicant
- Identity proof (any)
- Address Proof (any)
- Other documents (subject to applicant’s profile)
Canara Bank Recurring Deposit Tax Benefits
Canara bank recurring deposit is taxable under the Income Tax Act 1961. The money invested in RD is included in your yearly income and a TDS (Tax Deducted at Source) of 10% is levied on the interest earned (in case it is more than 40,000 per year). To save TDS on your RD interest profit, you can fill either Form 15G or Form 15H.
Terms and Conditions for submitting Form 15G:
- Applicant must be an individual or HUF
- Only Resident Indians can apply
- Age should be less than 60 years
- Tax calculated on your total income must be zero
- The total income from interests or the year should be less than the minimum exempt income for that year, which is Rs 2.5 lakh for FY 2019-20 (AY 2020-21)
Types of Canara Bank RD Account
Regular Recurring Deposit
This is the regular type RD scheme where one can make a minimum deposit of Rs.50 per month for the selected tenure to earn interest as applicable. The minimum investment period for the account is six months and in multiples of three months thereafter. The maximum period is 120 months.
Canara Bank Dhanvarsha Recurring Deposit Scheme – Flexi RD Scheme
One of the best advantages Canara Bank provides is the Canara Dhanvarsha recurring deposit scheme which allows the customer to deposit more than the monthly preset amount. Under this scheme, the account holder has the option to invest surplus/bonus funds into their Canara Dhanvarsha account. These extra deposits made by the customer will in turn return even more additional interest over the regular interest on the required monthly deposits.
Canara Bank Dhanvarsha Recurring Deposit Scheme is available to residents as well as non-resident Indians. The Canara Bank Dhanvarsha RD account can be opened for a minimum of 1 year to a maximum of 10 years by making a minimum monthly deposit of Rs.10,000 to a maximum of Rs.1 lakh. This scheme does not provide senior citizens with any special interest rates. However, facilities such as nomination, loan facilities, and others are applicable in this scheme.
Nitya Nidhi Deposit Scheme
The Pigmy Deposit Scheme comes after the merger of Syndicate Bank and Canara bank. The New Nitya Nidhi Deposit (NND) Scheme of Canara Bank came into effect on 1 April 2020. This scheme aims to collect the small savings of daily savers and entails daily door collection through the bank agents. The minimum investment required per month is Rs.50. The tenure for the account is 63 months and the interest rate is applicable at 2.50% p.a. from 1 October 2020.
Benefits of Opening a Canara Bank RD Account
A recurring deposit is one of the best ways to invest and save your money with the lowest or zero risks included. Moreover, what could be a better idea than investing just a small amount of money every month and earning interest on it. It plays a major role in achieving whatever financial goals you have set for yourself. Apart from the conventional benefits that most of the RDs offer, Canara bank recurring deposit will offer you additional benefits such as:
- Minimal low deposit amount (as low as Rs 50). Moreover, there is no cap on the maximum deposit amount making it an ideal investment method for individuals who have big savings goals.
- As the Canara bank RD interest rates 2021 is compounded on a quarterly basis, it offers high returns even if one opts for a premature withdrawal.
- Canara Bank offers a loan facility up to 90% of the deposited deposit balance
- The nominees can be modified anytime under Canara Bank Recurring Deposit 2021
How to Open a Canara Bank RD Account?
In order to apply for an RD account at Canara Bank, one has to visit any of the nearest Canara Bank’s branch with the following documents –
- Bank specified RD opening application form.
- PAN card copies or Form 60 or 61 (if PAN is not available)
- 2 photographs
- Identity proof.
- Address proof.
- Other documents based on the applicant’s profile.
So, keeping all the points in mind, it is evident that going with a Canara Bank Recurring Deposit can benefit you and help you achieve your financial goals. However, it is recommended that you read all the terms and conditions meticulously before investing in any scheme.
Canara Bank RD Interest Rates – FAQs
Ques. Is there a cap on the investment amount for the Canara DhanVarsha scheme?
Ans. No. You can make a deposit of up to 10 times the instalment amount including the regular instalment for the month.
Ques. Is there any penalty for late payment of the instalment?
Ans. Under the regular RD scheme, there is a penalty of Rs.1.50 for every Rs.100 instalment per month. This is levied for accounts with a tenure of up to 5 years and Rs.2 for every Rs.100 instalment per month for accounts that have a tenure of more than 5 years.
Please note that there is no penalty levied for delayed instalment payments in the Canara DhanVarsha scheme.
Ques. What is the eligibility to apply for an RD account at Canara Bank?
Ans. Indian residents and HUFs can open an RD account with Canara Bank. NRIs can also open a Canara RD account through NRO and NRE accounts.
Ques. Does Canara Bank provide a nomination facility on recurring deposit?
Ans. Yes, nomination facility is provided by Canara Bank.