In April 2019, Kotak Mahindra Bank became the second-largest private sector bank of India, with a plethora of financial offerings to its customers.
Among them, recurring deposits or RDs are considered to be one of the most preferred savings instruments these days. The fact that it enables individuals to build a reliable corpus with minimum regular investments certainly works in its favour. The attractive Kotak RD interest rates and other such essential features make it a better savings tool than most others.
In this article
Factors that Influence Kotak Mahindra RD Rates
Before getting into details about Kotak recurring deposit interest rates 2020, it is crucial for depositors to be familiar with factors influencing the RD rates.
Following are a few such factors that impact the Kotak RD interest rates–
- Deposit amount: A high deposit value accrues a higher rate of interest and helps deposit holders to grow their savings significantly.
- Tenure: In most cases, an RD account with a tenure of over 15 months is entitled to receive a higher rate of interest.
- Compounding Frequency: Usually, a higher compounding frequency yields higher interest and in turn, helps the deposit amount to grow.
- Customer type: The rate of interest also depends on the customer type. For instance, an additional Kotak RD Rates of 0.50% is paid to depositors who belong to the senior citizen category.
- RBI policies: Any major change in the policies of the Reserve Bank of India, pertaining to deposit accounts, will influence the Kotak Bank RD interest rates. For instance, rate cuts by RBI often lead to a reduction in the interest rates offered on recurring deposit schemes.
Kotak Mahindra Bank RD Interest Rates for 2020
The table below highlights the prevailing Kotak recurring deposit interest rates 2020-
|Tenor||Kotak Rd Rates||Kotak RD rates for senior citizen interest rates|
|Up to 180 days||4.75%||5.25%|
|180 days to 270 days||4.75%||5.25%|
|271 days to 365 days||5.15%||5.65%|
|366 days to 1 year and 3 months||5.25%||5.75%|
|1 year and 3 months to 1 year and 6 months||5.25%||5.75%|
|1 year and 6 months to 1 year and 9 months||5.25%||5.75%|
|1 year and 9 months up to 2 years||4.90%||5.40%|
|2 years to 2 years and 9 months||4.90%||5.40%|
|3 years to less than 4 years||4.75%||5.25%|
|4 years and 1 day to 5 years||4.75%||5.25%|
|5 years to 10 years||4.50%||5.00%|
It must be noted that Kotak RD interest rates are revised periodically as and when the bank deems fit. The new RD rates are usually based on the date and time of when the account is started. Individuals must get in touch with the representative of Kotak Bank to avail of accurate and case-specific details about the applicable Kotak RD rates.
Kotak Mahindra RD Account Eligibility
Typically, individuals belonging to any of the categories below can start a Kotak Mahindra RD Account –
- Resident Indian
- The sole or joint entity
- Non-resident Indian
It is a convenient option to mobilise small savings each month to build a reliable fund. Generally, it is considered to be a suitable savings plan for salaried individuals who do not generate substantial income to make lump sum investments. Also, the fact RD schemes are least affected by prevailing market conditions effectively makes them low-risk savings options.
Types of Kotak Mahindra Recurring Deposits
Recurring deposits offered by Kotak Mahindra Bank are of two types –
- Cumulative recurring deposit account
With a cumulative RD account, individuals can choose to avail the interest amount, alongside the amount deposited, after the completion of the RD’s tenure. With this RD, since the interest amount is accrued periodically without availing the payout, depositors can enjoy substantial returns from their deposit.
- Non-cumulative recurring deposit
With this type of RD, individuals can avail periodic interest payouts and are thus more suitable for those looking for a short term deposit plan to park their corpus. With non-cumulative recurring deposits, however, the returns are significantly lower than the former one.
How to Calculate Kotak Mahindra RD Interest?
Depositors can easily calculate the interest on their Kotak Mahindra RD by implementing the formula below –
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: Sujata opened a recurring deposit account with Rs.1000 for 3 years at the rate of 5.4% compounded annually. By using the above mentioned formula,
M = R x [(1 + i) x n – 1] / 1- (1 + i) (-1/3)
= 1000 x [(1 +5.4) x 3 – 1] / 1- (1 + 5.4) (-1/3)
Therefore, the amount availed by Sujata, at the maturity of the RD is Rs.38902, while the interest value is Rs.2902.
To avoid the cumbersome manual calculation process, individuals can use the Kotak Mahindra RD calculator and compute the accurate maturity value and interest amount for the given tenure. It not only helps users eliminate the risk of manual errors but also helps them to save significant time and energy.
Moreover, an online RD calculator is quite simple to use; all one needs to do is enter details like the monthly deposit value and tenure. Individuals can also make several adjustments to arrive at a suitable combination of deposit amount and tenure.
TDS on Kotak Mahindra Recurring Deposits
As per the Income Tax Act, 1961, all RD schemes are subjected to tax because the interest earned on the deposit amount gets added to the depositor’s annual income. In turn, the interest earned becomes a part of one’s taxable income.
Notably, if the total accrued interest amount exceeds Rs.10000 in a year, a TDS at the rate of 10% is charged on it. However, the RD account holder can raise a claim for tax exemption by submitting Form 15G/15H.
It must be noted here that the RD account holder must meet a few conditions to file such forms. For instance,
In case of form 15G
- One has to be a resident Indian below the age of 60 years.
- Deposit holder must be HUF or an individual.
- His/her computed tax amount on total income is nil.
- The total interest earned in the year should be less than the minimum tax exemption limit for the year.
In case of form 15H
- One must be a resident Indian who is at least 60 years of age.
- His/her tax amount on the total income is nil.
Despite offering favourable Kotak RD interest rates and lucrative features, the said RD schemes also have a few shortcomings. For instance, deposit holders are usually required to pay the penalty in case of a delay in paying the RD installment. Also, there are certain restrictions pertaining to premature withdrawal or closure of the RD deposit account. To make an informed decision, interested deposit holders should find out more about such limitations beforehand.