Recurring Deposit Interest Rates

One of the most preferred risk-free investments in India is the recurring deposit. An RD is an investment tool for people with regular incomes in which a fixed amount of money is accumulated monthly into the RD account for a fixed tenure. One can earn an RD rate of interest ranging from around 2.50%-8.50% by opening an RD account. RD interest rates are similar to that of Fixed Deposit but the flexibility of monthly installments is what makes RD stand out. The minimum tenure of a fixed deposit ranges from 6 months to 10 years.

Recurring Deposit Interest Rates – Overview

Particulars Details
Interest Rate Range from 2.50% to 8.50%
Minimum Deposit Amount Starts from Rs. 10 (for post office RD)
Tenure of the Investment 6 months to 10 years
Interest Compound Frequency Quarterly
Partial and Midterm Withdrawal Not Allowed
Premature Closure Allowed with penalty

Major Bank’s Best RD Interest Rates 2022

There are a plethora of banks that provide customers with the facility to get an RD account opened. Let’s have a look at the highest rd rates in 2022 from the top banks as of 2022.

Bank General Interest Rates Senior Citizen Interest Rates
SBI RD Interest Rates 4.40% – 5.50% 4.90% – 6.20%
ICICI RD Interest Rates 3.50% – 5.50% 4.00% – 6.30%
HDFC RD Interest Rates 4.40% – 5.50% 4.90% – 6.25%
Kotak Bank RD Interest Rates 4.30% – 5.20% 4.80% – 5.70%
Axis Bank RD Interest Rates 4.40% – 5.75% 4.65% – 6.50%
BOB RD Interest Rates 4.30% – 5.25% 4.80% – 5.75%
IDFC First Bank 6.75% – 7.25% 6.75% – 7.25%
PNB 4.40% – 5.30% 4.90% – 6.05%
IDBI Bank 7.00% – 7.15% 7.50% –7.65%
Citibank 2.75% – 3.00% 3.25% – 4.00%
Canara Bank 4.45% – 5.25% 4.95% –5.75%
Indian Bank 6.25% – 6.30% 6.75% – 6.80%
Indian Overseas Bank 4.90% – 5.20% 5.40% – 5.70%
Union Bank of India 4.40% – 5.60% 4.40% – 5.60%
Yes Bank 5.00% – 6.50% 5.50% – 7.25%
Bank of Maharashtra 4.00% – 4.90% 4.50% – 4.40%
Bank of India 4.30% – 5.05% 4.80% – 5.50%
Central Bank of India 4.20% – 5.00% 4.20% – 5.00%
Punjab and Sind Bank 4.45% – 5.25% 4.95% – 5.75%
UCO Bank 4.70% – 5.00% 4.90% – 5.00%
South Indian Bank 4.10% – 5.65% 4.00% – 6.15%
Bandhan Bank 4.50% – 5.00% 5.25% – 5.75%
AU Small Finance Bank 4.00% – 6.00% 4.50% – 6.50%
Post Office RD Interest Rate 5.80% – 5.80% 5.80% – 5.80%
Ujjivan Small Finance Bank 4.75% – 6.50% 5.25% – 7.00%
Equitas Small Finance Bank 6.25% – 6.50% 6.75% – 7.00%
Jana Small Finance Bank 5.50% – 6.75% 6.00% – 7.25%
ESAF Small Finance Bank 5.00% – 6.00% 5.50% – 6.50%
Lakshmi Vilas Bank 2.75% – 6.00% 2.75% – 6.50%
RBL Bank 4.50% – 6.30% 5.00% – 6.80%
Karur Vysya Bank 4.00% –5.35% 4.50% – 5.50%
IndusInd Bank 5.50% – 6.00% 6.00% – 6.50%

The rd interest rates differ from bank to bank and also on factors like which category you fall under and the tenure you choose. Almost all the banks privilege senior citizens with a higher rate of interest than regular citizens. A variety of recurring deposit schemes is made available by banks nowadays. Apart from the regular scheme, some additional special schemes are also made available to people to help them fulfill their goals.

Features of Bank Recurring Deposits Rates

Some of the major features of recurring deposit are given below:

  • No need to deposit a lump sum amount. The flexibility allows you to opt for the suited amount which can be as small as ₹ 10.
  • One can choose the tenure of the deposit as well, which can range from 6 months to 10 years.
  • The RD interest rates offered are almost the same as that of Fixed Deposits.
  • Under the RD scheme, minors can also open an account under the guardianship of their parents.
  • Senior citizens are privileged with a higher rate of interest, which is usually 0.50% more than the general citizens.
  • Premature and partial withdrawals are allowed in RDs with some extra charges
  • An RD account can also be used as collateral to get loans. Generally, the loan to value ratio is 80-90%.

How to Calculate Interest Rate for Recurring Deposit Scheme?

The interest under the recurring deposit scheme is calculated by entailing various factors like invested funds, tenure, and the type of scheme selected. You can calculate the interest on your investment either by RD calculator or the formula given below:

M= R[(1+i)n-1]/1-(1+i)-⅓

Where,

  • ‘M’ represents maturity value
  • ‘R’ represents the monthly installment
  • ‘n’ represents the number of quarters
  • ‘i’ represents the rate of interest

Premature Withdrawal of RD

Premature withdrawal is usually not allowed on RD schemes; the RD amount can only be withdrawn upon maturity. However, in the case of any emergency, one can withdraw the RD amount before maturity by closing the account. The bank may deduct 1% – 2% as a penalty from the interest accrued on your RD amount till the period for which the amount was with the bank.

One important thing to note here is the minimum lock-in period for an RD account is 3 months and if the depositor decided for premature withdrawal before that, he/she earns zero interest and only the principal amount will be refunded.

Partial Withdrawal of RD

There is no partial withdrawal allowed in the case of an RD. Still, there are some banks that have a loan or overdraft facility by keeping the deposit as collateral for it. But the RD accounts of post offices have a premature withdrawal for a year, and the withdrawn amount is considered as a loan.

Tax Exemptions of an RD

Recurring deposit programs, like other personal tax-saving and investing tools, are taxed. If the total interest earned from an RD surpasses Rs.10,000 in a single fiscal year, a TDS of 10% is deducted. When compared to the SIP scheme, it is clear that SIPs are more beneficial in the long run. Because long-term equities gains are tax-free, any SIP that invests in ELSS (Equity Linked Mutual Funds) is tax-free after one year.

Types of RD Interest Rates

  • Regular RD Savings Scheme

Indian banks offer recurring deposits to citizens who have attained 18 years of age. Customers can choose a fixed monthly amount for a tenure of a minimum of 6 months to 10 years. Interest can be calculated on a simple or compound basis. A customer can withdraw the lump sum amount at the end of the tenure. Under this scheme, an account can be opened with as low as Rs.10 per month and the interest rates generally range from 7%-8% p.a.

  • RD Schemes for Minors

Banks also have a scheme under which an account can be opened for kids. Parents or guardians can open this account for their children to start accumulating funds for their future, education and some other needs. The most important part is the returns on this investment can be either equivalent to regular RD schemes or maybe higher. These schemes develop a sense of saving among youngsters.

  • RD Schemes for Senior Citizen

As mentioned earlier, senior citizens can avail of a comparatively higher rate of interest from RD schemes. Usually, the interest rates are at the higher end of the spectrum and range between 7.5% to 9.25% per annum. Moreover, there are also some schemes available that help senior citizens plan their retirement.

  • NRE/NRO Recurring Deposit Schemes

NRE (Non-Resident External Account) and NRO (Non-Resident Ordinary Account) may offer a lower rate of interest. On top of that, senior citizens who have an NRE/NRO account are not offered additional interest rates.

  • Special Recurring Deposit Schemes

Banks also offer a blend of schemes designed to meet the requirements of a variety of customers. These schemes usually offer a higher rate of interest as the customers’ goal is lucid. For instance, ICICI bank offers the iWish deposit scheme which allows the customer to deposit different figures of the amount to their RD account. There are other schemes available by other banks that offer great returns so that the lump sum amount grows manifold making the investment advantageous.

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Different Types of RD Products

  • ICICI Bank

Product Name Deposit Amount Tenure
Croma delightful deposits Rs. 5,000 or Rs. 10,000 6 months or 12 months
MakeMyTrip Holiday Savings Plan Rs. 5,000 6 months or 12 months
Tanishq Jewelry Plan Rs. 5,000 12 months
Thomas Cook Holiday Savings Account Rs. 5,000 or Rs. 10,000 12 months
  • SBI

Product Name Deposit Amount Tenure
Holiday Saving RD ₹ 100 N.A
  • Bank of Baroda

Product Name Deposit Amount Tenure
Samriddhi Quarterly Recurring Deposit Rs. 500 36 months
Samriddhi Half Yearly Recurring Deposit Rs. 1,000 36 months
Yatha Shakti Jama Yojna N.A 10 months
  • Central Bank of India

Product Name Deposit Amount Tenure
Cent Swa Shakti Flexi ₹ 100 6 months
Cent Lakhpati ₹ 100 12 months
Cent Millionaire ₹ 100 12 months

 

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