Dewan Housing Finance Corporation Limited or DHFL is a well-known Indian housing finance company with its headquarters in Mumbai and branches across the country. Besides affordable housing-oriented financial products, DHFL also offers its customers other lucrative financial products, of which a recurring deposit scheme is particularly worthy of mention.
Recurring deposits or RDs are term deposit plans which allow individuals to deposit a fixed amount into their account each month and earn attractive returns in the form of interests. The DHFL RD rates provided on the said deposit scheme helps individuals to mobilise their small savings and generate significant returns on the same.
In this article
Factors Influencing DHFL RD Rates
There are several internal and external factors that influence the interest rates offered on recurring deposits. For instance, these following are among the most important ones which affect the DHFL RD rates in general –
Individuals can select the deposit tenure as per their requirements. The DHFL recurring deposit comes with a tenor that extends from a year to 10 years. In this regard, it must be noted that the DHFL bank RD rates depend on the chosen tenure. For instance, an RD account that is held over a longer tenure attracts a relatively higher rate of interest.
- Deposit amount
It must be kept in mind that a higher deposit value attracts a better interest rate. Individuals can start a recurring deposit account with DHFL with as little as Rs.500, to be further increased in multiples of 100. A higher deposit amount attracts a higher rate of interest.
- Customer Type
DHFL recurring accounts have had a reputation of extending a substantially high return on the deposit amount. Notably, the DHFL recurring deposit rates provided to senior citizens is comparatively higher than the regular RD holders.
Other than these, changes in RBI’s policies and the general condition of the economy also majorly influence the DHFL RD rates.
DHFL RD Interest Rates for 2020
The table below illustrates the DHFL RD interest rates 2020.
|Tenor||DHFL RD Rates for individuals below 60 years of age||DHFL RD rates for senior citizens|
|Up to 365 days||8%||8.40%|
|366 days to 2 years||8%||8.40%|
|2 year and from 1 day up to 3 years||8%||8.40%|
|3 year and from 1 day up to 4 years||8%||8.40%|
|4 years and 1 day to 5 years||8%||8.40%|
|5 years and from 1 day up to 6 years||8%||8.40%|
|6 years and 1 day to 8 years||8%||8.40%|
|8 years and 1 day to 9 years||8%||8.40%|
|9 years and 1 day to 10 years||8%||8.40%|
Here, it must be noted that external factors like RBI’s policies, recession, inflation, economy, etc. tend to influence the DHFL RD interest rates.
The availability of the financial product and its rate of interest may vary in the current situation. Individuals must, thus, contact the representative of the financial institution to gain full insight into the same.
DHFL RD Account Eligibility
Individuals belonging to any of the following categories can open a recurring deposit account with DHFL –
- Resident Indian
- Non-resident Indian
Notably, NRIs can opt for a DHFL RD scheme through NRE and NRO accounts. Individuals should find out from the representatives of the financial institution about case-specific eligibility criteria to avail a better idea about the same.
Types of DHFL Recurring Deposits
DHFL provides its customers with a Regular Recurring Deposit Scheme, which is also known as the Small Savings Scheme. The said scheme comes in two types, namely –
- Cumulative Recurring Deposits
With this deposit option, individuals can choose to avail the interest earned, alongside the amount deposited after the maturity of the account. Since individuals choose not to avail a periodic payout, and the interest is accrued periodically, the account holder can enjoy substantial returns on the maturity of his/her RD.
- Non-cumulative Recurring Deposits
With a non-cumulative deposit individuals can opt for periodic payouts from their RD, and comparatively, earn lower returns as compared to cumulative RDs.
These are the two types of deposit options that individuals can choose between when it comes to DHFL recurring deposits.
How is Interest Calculated on DHFL RD?
Most banks utilise the formula given below to calculate the interest on recurring deposits –
M = R x [(1 + i) x n – 1] / 1- (1 + i) (-1/3)
- M= Maturity Value
- R = Monthly Instalment
- i = Interest rate
- n = Tenure
Example: Puja started a DHFL recurring deposit account with a monthly deposit of Rs.1000 for 2 years at the rate of 8% which is compounded annually. With the help of the formula,
M = R x [(1 + i) x n – 1] / 1- (1 + i) (-1/3)
= 1000[(1 + 8) x 2 – 1] / 1- (1 + 8) (-1/3)
The maturity value that Puja will be able to avail from her RD account would stand at Rs.26091.
Now, calculating the compounding interest on DHFL RD schemes may prove to be a lengthy process. Consequently, it may also come with an additional risk of computing the wrong maturity value or interest amount due to careless mistakes.
To avoid the same, individuals may use the DHFL RD calculator online and achieve more accurate results. Another added benefit of using the RD calculator is that individuals will be able to obtain accurate results within a few seconds by simply entering the deposit value and tenure.
TDS on DHFL Recurring Deposits
According to the Income Tax Act, 1961, all recurring schemes are subject to taxation. The reason behind it is that the interest amount earned on the deposited value is added to the depositor’s yearly income. Resultantly, the interest earned on the RD account becomes a part of their taxable income.
It must be noted that if at any time the interest earned on DHFL RD exceeds Rs.10000 in a financial year, a TDS of 10% is charged on it. Regardless, RD holders can claim a tax exemption on TDS by submitting Form 15G or Form 15 H.
Individuals who meet these following criteria can claim exemptions by submitting Form 15G –
- A resident Indian who is less than 60 years of age.
- An individual or HUF.
- Tax on total income should be nil.
- Accumulated interest in a year should be lower than the exemption limit.
Individuals who meet these following can claim exemptions by submitting Form 15H –
- A residing Indian who is at least 60 years old.
- The total tax on aggregate income is nil.
Regardless, individuals who intend to avail a recurring deposit from the financial institution should also weigh in other factors apart from the DHFL RD rates. It will help them to make the most of this savings scheme as per their convenience and requirement.