Turn your dreams into plans with a Recurring Deposit


A recurring deposit is a type of term deposit offered by banks and other financial institutions in India. It allows people to frequently invest a fixed amount for a specific duration instead of locking a large amount at once. It is a safe investment option and allows you to earn a tempting interest rate.


Some of the outstanding features of a Recurring Deposit are:

Supports regular investments

An RD allows people to invest funds frequently. Therefore, it works perfectly for: 

  • People who don’t need to deposit a large amount at once 
  • People who intend to deposit a reasonable amount every month. 

You can usually deposit money into an RD every month. However, some banks also give you the option to invest daily, quarterly or semi-annually. In addition, your bank may even allow you to start an RD with as little as Rs. 100

Develops a saving habit

Depositing a regular sum every month into a Recurring Deposit Account develops a saving habit.

Interest at maturity

RD interest rates are similar to those offered by fixed deposits. Also, the rate is higher than what you would earn if you left the money unused in a savings account. If you’re a senior citizen, you can show your ID and proof of age and earn a rate that’s 0.50% higher than others.

Minimum and maximum tenure

The minimum tenure for an RD is generally six months and may go up to 10 years. 

Guaranteed returns

Term deposits, which include both recurring and Fixed Deposits, are safe investment options and offer guaranteed returns regardless of market volatility. Furthermore, these deposits are insured by DICGC for an amount up to Rs. 5 lakhs. Therefore, an RD serves as a promising investment vehicle for risk-averse investors.

Tax implications

The RD interest rates are treated as income and classified under ‘income from other sources’ when filing income tax returns. Hence, it is taxable according to the tax slab applicable to you. The bank also deducts a Tax Deducted at Source at 10% if your interest income goes beyond Rs. 40,000.

How to open an RD Account?

All major banks in India allow you to open an RD Account and invest regularly. The only requirement is a savings account with the bank you choose. In addition, today, you no longer have to go to the branch to open such an account. You can simply use the banking app and open an RD account online. There is also no upper limit to the number of RDs you can hold. 

Simply choose a daily, monthly, or quarterly payment option along with the FD amount, which will be automatically deducted from your account at your chosen interval.

Factors to Remember Before Starting a Recurring Deposit Account

You need to consider the following factors before opening a recurring deposit account:

Minimum Amount

The minimum amount you can deposit into the recurring account is INR 1000. Individuals can also increase the amount in multiples of Rs 100. Since you don’t require too much money to open a recurring account, the process of opening the account is simple, and the banks have a large rate cap. Besides that, you can open a permanent account with a little credit and earn interest through it. 


For most terms, the minimum term of a permanent deposit account is six months. The maximum term can be up to 10 years. Depositors can choose any recurring account term. Be extremely careful when choosing the term of your permanent deposit account. Once a term of office has been elected, it cannot be changed until it is due.


A checking account is just like a fixed deposit. Once you have opened an RD account, you can’t withdraw funds from it. Partial withdrawals from a permanent deposit account are not allowed.


After opening the standing account, individuals can earn interest on their balance every month. The interest rate for recurring accounts ranges from 7% to 9%. The interest amount gets paid out when the standing account becomes due. When you have a permanent account, there will be no option available for monthly interest withdrawal. 

Taxation of Interest

Interest on recurring deposits is taxable. However, banks will not deduct TDS as long as the interest earned is more than Rs 40,000. For all senior citizens, TDS will get deducted if the interest amount goes over Rs 50,000. When a person’s income is less than the tax-free limit, they can submit Form 15G or 15H to make sure that the bank doesn’t deduct tax.

Different Types of Recurring Deposit Accounts

Apart from a regular recurring deposit account, the following types are available:

Recurring Deposit Account for the Senior Citizens

The attributes of this recurring deposit account are pretty much identical to the regular RD Account. But these accounts are ideal for all senior citizens where they can earn higher interest rates. The interest will get compounded based on the prevalent interest rate. Besides that, senior citizens have the ability to draw a much higher term amount. It can enable them to meet short-term financing demands when they do not have a regular income. Interest rates on senior RD accounts are typically 0.25% to 0.75% higher than regular RD accounts. 

Recurring Deposit Account for all the NRIs 

This is one of the most suitable investment options for NRIs. A small recurring investment each month can help NRIs generate significant returns at maturity. However, NRIs can only invest in recurring deposits through an NRE or NRO recurring deposit account. 

Term Deposit Accounts for the Minors 

Term Deposit Accounts are also available for those under the age of 18. However, these accounts can only be opened under the supervision of a parent or legal guardian. As with normal permanent deposit accounts, a monthly installment amount and term must be specified when the account is opened. When compared to a minor permanent deposit account to a regular RD account, the returns could be slightly higher.


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