YES Bank RD – Types, Features and Benefits
YES Bank is among the renowned financial institutions of the country with an extensive line up of financial products and services on offer for a varied range of customer needs.
YES Bank recurring deposit is one of the most sought after financial services extended by the institution. The said scheme works to help individuals save more and secure their future in terms of finances.
The YES Bank RD is a term deposit scheme, where individuals tend to deposit a fixed sum into their YES Bank RD account regularly. The sum thus deposited accrues a rate of interest on it, which compounds quarterly.
Types of YES Bank RD Scheme?
There are two types of YES Bank Recurring Deposit Schemes –
- Regular Recurring Deposit Scheme: In this type of scheme, individuals opt for a fixed amount. A minimum limit for a regular RD scheme is pre-fixed by the bank. On maturity, individuals who had invested in this scheme type would earn a lump sum inclusive of principal amount and accrued interest. This scheme is deemed suitable for individuals with a steady source of income, who are primarily small-time investors.
- NRE Recurring Deposit Scheme: In this type of scheme, individuals are entitled to enjoy a higher rate of interest. The said rate of interest is equivalent to the rate of interest offered on NRE fixed deposits, – 7.85% p.a. This scheme can be started with a minimum deposit of Rs. 500 every month.
Features and associated benefits of YES Bank Recurring Deposits?
For Regular YES Bank RD account –
- The minimum sum that needs to be deposited each month is Rs. 1,000. The deposit amount should be in multiples of Rs. 100.
- It does not put an upper limit on the maximum amount that can be deposited each month.
- The tenure of the Regular YES Bank RD account ranges between 6 months-10 years.
- The interest rate is similar to that of FD and the interest accrued on this RD account is entitled to TDS deductions.
- The monthly instalment options make it an affordable option of investment.
For NRE YES Bank RD account –
- The minimum sum that needs to be deposited each month is Rs. 1,000. The amount to be deposited should be in multiples of 100.
- The tenure of the NRE YES Bank RD account ranges between 12 months -10 years.
- The interest rate offered is similar to that of NRE FD and the interest accrued through this RD account is entitled to TDS deductions.
- Individuals can withdraw prematurely from their NRE YES Bank RD account after a year has passed since it was opened. However, no interest would be paid on the same.
Who is suitable for the YES Bank RD Scheme?
Salaried-individuals who earn a fixed income and have a limited amount of possible savings would find the YES Bank RD scheme suitable. Being a deposit scheme that generates earnings in the form of interest on deposit, the scheme would act as an attractive savings-cum-investment option. Through monthly deposits, individuals would be able to build a healthy corpus over time to meet the basic financial requirements.
Eligibility of the YES Bank Recurring Deposit?
Individuals who hold a savings account with YES Bank are deemed eligible to open a YES Bank Recurring Deposit account with it.
Rate of interest offered by YES Bank RD Account?
The rate of RD interest offered by the YES Bank is at par with its FD scheme and tends to depend on the amount and term on deposit.
The interest offered is compounded quarterly that can be withdrawn before the end of a stipulated tenure.
The rate of interest extended by the YES Bank is subject to change, and the rates offered to senior citizens are comparatively higher than that offered to the others. Senior citizens can avail up to 7.6% interest rate on their YES Bank RD.
The table below illustrates the different rates of interest for a deposit below Rs. 1 Crore –
|Deposit Tenure||Returns on Investment per annum||Returns on Investment for Senior Citizens per annum|
|Over 2 years-10 years||7.1%||7.6%|
How is interest calculated on YES Bank Recurring Deposit?
The interest on YES Bank Recurring Deposit is calculated at each quarter. The compounding interest formula which applies for the computation of the maturity amount is as follows –
A= P x (1+R/N) ^ (Nt)
A stands for Maturity Amount.
P stands for Recurring deposit.
N stands for Number of times the interest is compounded.
R stands for Rate of interest.
t stands for Tenure.
Ms. Kusum invests Rs. 1,000 per month into her Regular YES Bank RD account for 9 months. The sum accrued interest at the rate of 7% is thus –
A= P x (1+R/N)^(Nt)
= 9000 x (1+7/4)^(4×9/12)
= Rs. 9,264
The returns generated via interest would be Rs. 264.
How is Yes Bank Recurring Deposit taxed?
Under the Income Tax Act, 1961, Recurring Deposit is a taxable and the proceeds generated through it are taken into account while calculating taxable income from other sources.
Additionally, if an individuals’ earnings generated through YES Bank RD exceed a certain limit, it is further liable for TDS.
Taxation on Recurring Deposit of YES Bank is explained below –
- If the interest accrued in a year exceeds Rs. 10,000, the proceeds would incur a TDS at the rate of 10%. However, if the individual’s IT PAN is not up to date, they would have to pay a TDS at the rate of 20%.
- Additional interest on income would attract a tax that would be charged as per an individual’s income tax slab.
The YES Bank recurring deposit serves as a goal-based investment option. Besides allowing individuals the opportunity to save more and earn better, it also mobilises savings in an economy in general.
However, if an individual is seeking for an option that offers better returns with greater liquidity, they can look for other avenues of investment like Mutual Funds.
Investing in Mutual Funds allows individuals to build a larger corpus of funds to meet their immediate and long-term financial goals. They would further be able to diversify their profile when as how they feel would benefit them the most.