Recurring Deposits (RD) – Features, Steps, RD Interest Rates, Merits and Demerits

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A Recurring Deposit is a kind of term deposit which helps people with regular incomes to deposit a fixed amount every month with a good interest rate.It’s similar to fixed deposits of a certain amount in monthly installments. Investors can choose their period of deposit and monthly payment amount based on their convenience. It helps common people to save their money in terms of deposits.


  • Open an RD account by depositing the minimum amount of Rs.100/m.
  • Recurring Deposit accounts offer an interest rate higher than that of Fixed Deposit accounts.
  • One person can open any number of RD accounts.
  • Recurring Deposit account is to be opened for minimum of 6 months and maximum of 10 years.
  • Premature withdrawals are allowed subject to the penalty.
  • Set standing instructions so that the installment amount will be deducted automatically from your Savings bank account if that person holds it. 
  • Some Banks offer an additional Rate Of Interest especially for senior citizens and disabled people.
  • Recurring Deposit accounts can be opened in the name of minors with the guidance of parents.
  • One has to pay penalty charges if any installment is delayed, the interest payable in the account will be reduced. 
  • One can avail the benefit of loan upto 80% to 90% of deposited amount by pledging RD account.
  • Recurring deposit accounts can be opened either in banks or in post offices. 


 One has to become the customer of the bank by opening an account either online or offline. 

  1. Visit the nearest bank where you have a Savings account.
  2. If you do not have Savings account then open it by providing specified documents i.e., Any ID proof, Passport size photograph (Follow the instructions stated by the bank) 
  3. Some banks will not ask you to open the Savings account, in such case you can directly open an RD account.
  4. Fill up the RD application form by following the instructions given by the bank and specify the details such as Name of the A/C holder, Occupation, Age, Term of deposit, Installment amount, Mode of payment, deposit tenure, Nominee and other details. 
  5. Make an initial deposit through a cheque/cash.
  6. The banker will process your application within a stipulated period.

Top 18 Banks and Their RD Interest Rates

Bank Name Regular RD Interest Rates (% p.a.)* Senior Citizen RD Interest Rates (% p.a.)*
SBI 5.00-5.40 5.50-6.20
Canara Bank 4.45-5.50 4.95-6.00
Bank of Maharashtra 6.00-6.50 6.50-7.00
DBS Bank 2.50-5.50 2.50-5.50
Citibank 3.00-3.25 3.50-3.75
Indian Bank 3.95-5.25 4.45-5.75
Bank of Baroda 4.50-5.70 5.00-6.20
HDFC BAnk  4.50-5.75 5.00-6.25
ICICI Bank 4.75-6.00 5.25-6.50
UCO Bank 4.95-5.00 5.25-5.50
Kotak Bank  5.00-5.50 5.50-6.00
Bandhan Bank 5.40-6.75 6.15-7.50
Union bank of India 5.50-5.90 5.50-5.90
Andhra Bank 5.50-5.80 6.00-6.30
Punjab National Bank 5.50-5.80 6.00-6.30
IDBI Bank 5.75-5.90 6.25-6.40
Indian Overseas bank 5.75-6.80 6.25-7.30
Axis Bank 6.05-6.50 6.55-7.00
Post Office 5.80 5.80
Interest rates are subject to change with time


  1. Inculcates the habit of savings.
  2. Interest rate is higher than that of Savings account. 
  3. Minimum deposit amount is Rs.100.
  4. Simple documentation, Need not to provide any details for people who are already having a savings Bank Account.
  5. Great savings option to attain short term goals.
  6. If you are paying some amount in the initial stage with the Rate Of Interest 8% and it falls after 2-3 months then you will be eligible for an ROI of 8%.


  1. Premature withdrawals are subject to penalty.
  2. Installment amount is fixed. For example if you are paying Rs.1000 as initial deposit then you have to continue with the same amount every month.

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