Indian Bank Recurring Deposit scheme can be considered as one of the best RD schemes to invest in as a first-time investor. An Indian Bank RD account can be opened for a tenure ranging from 6 months to one year. The minimum deposit amount needed is just Rs. 25 and the Indian Bank RD Interest rates that you can earn range from 4.00% to 5.25% p.a. Here, we have curated all the details about this deposit scheme including rates, features, and eligibility.
|Tenure||Interest rate for General Citizens||Interest Rate for Senior Citizens|
|181 days – 269 days||4.00%||4.50%|
|9 months – 364 days||4.40%||4.90%|
|1 year 1 day – 1 year 364 days||4.95%||5.45%|
|2 years – 2 years 364 days||5.10%||5.60%|
|3 years – 10 years||5.25%||5.75%|
Note: – The above table shows the RD interest rates for Deposits Less than 2 Crore*
|Minimum deposit amount allowed||Rs. 25 per month|
|Maximum deposit amount allowed||Rs. 1 Lakh per month|
|Tenure for the RD||Ranges between 1 year and 10 years|
|Applicable interest rates||3.95% – 5.15% (is subject to change at the bank’s discretion); senior citizens do not have any additional benefits on interest rates.|
|Premature withdrawal||Not allowed|
|Late payment penalty charges||Not applicable|
|Tax Exemptions on RD in Indian Bank||The income tax will be deducted at a source by the bank when the interest earned on the FD account across all the bank branches exceeds an amount of Rs.40,000 for a financial year for the regular customer. And the limit for senior citizen customers will be Rs.50,000. The TDS that is applicable is 10%. Because of the pandemic, the TDS rate has been reduced to 7.5%.|
Usually, you get an option of premature withdrawal, i.e. breaking the RD before the maturity period, but the stated interest can get hampered and you might end up with less interest rate depending on how early you break the RD from the maturity date.
Indian bank allows premature withdrawal of the deposited amount but the interest earned on the amount will differ in that case (depends on bank rules). Partial withdrawal is not allowed.
The interest amount on his account can be derived by the equation –
A = P*(1+R/N)^(Nt)
Where A is the maturity amount, P is the principal amount deposited each month, N Compounding Frequency (no. of quarters), and R is the rate of interest, and t is the Tenure.
For example, if Mr. Singh opens a recurring deposit account by depositing Rs. 500 per month and continues to deposit regularly over a period of 24 months (two years), his account will attract an interest rate of 6.6% per annum.
According to the formula above, Mr. Singh will accumulate a maturity amount of Rs. 12859 on his RD (total investment – Rs. 12000 and total interest – Rs. 859).
The maturity amount on Indian Bank RD depends on certain factors entailing the tenure, deposit amount, rate of interest. One can make use of the RD calculator of Indian Bank to get the exact maturity amount. There are a plethora of websites offering these; you can use any of those to calculate the interest earned on the deposited amount. Recurring deposits are one of the best low-risk with a decent return of investment options available.
If you are not an Indian Bank customer, you must open an Indian Bank Savings Account and link it to your RD account. It is simple and quick to open. You can also go to your local branch and have a bank representative assist you with the procedure.
Insured Recurring Deposit: Apart from the interest earned on your investment, this RD scheme provides you with life insurance cover. This account can be opened with a minimum amount of Rs. 100 for a period ranging from 3 years to 5 years.
Variable Recurring Deposit: Under this scheme, one gets the flexibility to change the monthly installments. This account can be opened with a minimum deposit amount of Rs. 25 or a maximum of Rs. 1 lakh. The best thing about this scheme is no penalties are imposed if there’s any delay in the monthly installments.
Under the Indian Bank periodic interest payout option, the bank would transfer the interest earned at each interval (for instance, quarterly) to your bank account. The interest remains the same throughout the tenure of the deposit. The principal amount is transferred to your account o upon maturity of your RD (unless the deposit is renewed).