What is Recurring Deposit (RD)?

Recurring Deposit is a savings scheme where you deposit a fixed amount every month for a predetermined period. It combines the discipline of regular savings with the security of fixed deposits, making it perfect for building wealth systematically.

How RD Interest is Calculated

RD Maturity Formula

M = R × [(1 + i)^n - 1] / [1 - (1 + i)^(-1/3)]

Where:

• M = Maturity amount
• R = Monthly deposit amount
• i = Monthly interest rate (Annual rate ÷ 12)
• n = Number of months

Simplified Calculation

Total Deposits = Monthly Amount × Number of Months Interest Earned = Maturity Amount - Total Deposits

Current RD Interest Rates (2025)

Public Sector Banks

• State Bank of India: 6.50% - 7.00%
• Punjab National Bank: 6.75% - 7.25%
• Bank of India: 6.50% - 7.00%

Private Sector Banks

• HDFC Bank: 7.00% - 7.50%
• ICICI Bank: 7.00% - 7.40%
• Kotak Mahindra Bank: 7.25% - 7.75%

Small Finance Banks

• Ujjivan Small Finance Bank: 8.00% - 9.00%
• Jana Small Finance Bank: 8.25% - 8.75%

Rates vary based on tenure and bank policies

RD Calculation Examples

Example 1: 5-Year RD

• Monthly Deposit: ₹5,000
• Interest Rate: 7.5% per annum
• Tenure: 5 years (60 months)
• Total Deposits: ₹3,00,000
• Maturity Amount: ₹3,64,647
• Interest Earned: ₹64,647

Example 2: 3-Year RD

• Monthly Deposit: ₹10,000
• Interest Rate: 7% per annum
• Tenure: 3 years (36 months)
• Total Deposits: ₹3,60,000
• Maturity Amount: ₹3,99,212
• Interest Earned: ₹39,212

Benefits of Recurring Deposits

1. Disciplined Savings

Forces regular monthly savings habit, similar to SIP but with guaranteed returns.

2. Capital Protection

Principal amount is completely safe with guaranteed returns.

3. Flexible Tenure

Choose tenure from 6 months to 10 years based on your goals.

4. Low Minimum Amount

Start with as low as ₹100 per month in most banks.

5. Loan Against RD

Get loan up to 80-90% of RD value in case of emergency.

RD vs Other Investment Options

RD vs SIP

RD vs PPF

Types of Recurring Deposits

1. Regular RD

Standard monthly deposit with fixed tenure and interest rate.

2. Flexible RD

Allows varying deposit amounts within specified limits.

3. Step-Up RD

Deposit amount increases annually by a fixed percentage.

4. Senior Citizen RD

Additional 0.25% - 0.50% interest for senior citizens.

RD Investment Strategies

1. Goal-Based Planning

• Short-term goals (1-2 years): Emergency fund, vacation
• Medium-term goals (3-5 years): Car purchase, home down payment
• Long-term goals (5+ years): Children’s education, retirement

2. Tenure Selection

Longer tenure generally offers higher interest rates but less flexibility.

3. Amount Planning

Start with comfortable amount and increase with salary increments.

4. Bank Selection

Compare interest rates and choose bank with highest rate for your tenure.

Tax Implications of RD

TDS on RD Interest

• 10% TDS if annual interest exceeds ₹40,000
• ₹50,000 threshold for senior citizens
• Submit Form 15G/15H if income is below taxable limit

Income Tax Treatment

• RD interest is added to total income
• Taxed as per applicable income tax slab
• No tax benefits available under any section

Using RD Calculator Effectively

Our RD Calculator helps you:

1. Calculate maturity amount for any monthly deposit and tenure
2. Compare different scenarios to find optimal investment
3. Plan monthly budget based on target corpus
4. Understand interest accumulation over time

When to Choose RD

Ideal For:

• Conservative investors seeking guaranteed returns
• Regular income earners who can commit monthly amounts
• Short to medium-term goals (1-5 years)
• Building emergency fund systematically
• First-time investors learning financial discipline

Not Ideal For:

• Long-term wealth creation (inflation may erode real returns)
• High tax bracket individuals (tax inefficient)
• Irregular income (penalty for missed deposits)

RD vs Fixed Deposit Decision

Choose RD When:

• You want to save regularly from monthly income
• Building corpus for specific goal over time
• Learning financial discipline
• Don’t have lump sum to invest

Choose FD When:

• You have lump sum amount available
• Need higher interest rates (generally higher than RD)
• Want flexibility in interest payout options
• Planning for shorter duration

Common RD Mistakes to Avoid

1. Missing monthly deposits (penalty charges apply)
2. Not comparing interest rates across banks
3. Ignoring inflation impact on real returns
4. Auto-renewal without review
5. Not considering tax implications

Digital RD Features

Online RD Management

• Open RD account online
• Set up auto-debit for monthly deposits
• Track growth through mobile apps
• Instant maturity processing

Alerts and Reminders

• SMS/email alerts for due dates
• Maturity notifications
• Interest credit confirmations

Future of Recurring Deposits

Technology Integration

• AI-powered savings recommendations
• Integration with UPI for seamless deposits
• Robo-advisory for optimal tenure selection

Product Innovation

• Flexible RD with variable deposits
• Goal-based RD products
• Integration with investment platforms

Conclusion

Recurring Deposits are excellent for building disciplined savings habits while ensuring capital protection. While returns may be modest, the guaranteed nature and systematic approach make RDs valuable for specific financial goals and conservative investors.

Start your systematic savings journey with our RD Calculator and build wealth through disciplined monthly investments!

Important: RD interest rates are subject to change based on RBI policies. Always verify current rates and terms before opening an RD account.