Recurring Deposit Interest Rates in India 2025
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The interest rate offered by banks on RDs depends on factors like which category you fall under and the tenure you choose. Most banks offer senior citizens a higher rate of interest when compared to regular citizens.Updated On – 15 Jan 2025
You will earn interest on the invested amount as per the interest rate offered by the bank with which the Recurring Deposit account is opened.
Overview of Recurring Deposit Rates
| Particulars | Details |
| Rate of Interest | 4.75% to 8.50% |
| Minimum Amount of Deposit | Rs 10 (Post Office RD) |
| Investment tenure | 6 Months to 10 Years |
| Compounding Interest frequency | 3 Months |
| Withdrawal prior to maturity | Not Allowed |
| Premature closing of RD | Allowed with penalty |
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RD Interest Rates for General and Senior Citizens
| Bank | RD Interest Rates (General Public) | RD Interest Rates (Senior Citizen) |
| SBI RD Interest Rates | 6.00% to 7.00% | 6.50% to 7.50% |
| ICICI RD Interest Rates | 4.75% to 7.20% | 5.25% to 7.75% |
| HDFC RD Interest Rates | 7.00% to 7.25% | 7.50% to 7.75% |
| Kotak Mahindra Bank RD Interest Rates | 6.00% to 7.40% | 6.50% to 7.90% |
| Axis Bank RD Interest Rates | 5.75% to 7.20% | 6.25% to 7.85% |
| Bank of Baroda RD Interest Rates | 5.75% to 7.25% | 6.25% to 7.75% |
| Punjab National Bank RD Interest Rates | 6.05% to 7.30% | 6.55% to 7.80% |
| IDBI Bank RD Interest Rates | 6.25% to 7.00% | 6.75% to 7.50% |
| Canara Bank RD Interest Rates | 6.15% to 7.25% | 6.65% to 7.75% |
| Indian Bank RD Interest Rates | 4.75% to 7.25% | 5.00% to 7.75% |
| Indian Overseas Bank RD Interest Rates | 5.75% to 7.30% | 6.25% to 7.80% |
| Union Bank of India RD Interest Rates | 4.90% to 7.25% | 5.40% to 7.75% |
| Yes Bank RD Interest Rates | 7.25% to 8.00% | 7.75% to 8.50% |
| Bandhan Bank RD Interest Rates | 4.50% to 7.85% | 5.25% to 8.35% |
| Bank of India RD Interest Rates | 5.50% to 7.30% | 6.00% to 7.80% |
| City Union Bank RD Interest Rates | 6.25% to 7.25% | 6.50% to 7.75% |
| DBS Bank RD Interest Rates | 6.00% to 7.50% | 6.50% to 8.00% |
| Dhanalakshmi Bank RD Interest Rates | 6.50% to 7.25% | 7.00% to 7.75% |
| Federal Bank RD Interest Rates | 5.75% to 7.40% | 6.25% to 7.90% |
| IndusInd Bank RD Interest Rates | 5.85% to 7.99% | 7.25% to 8.25% |
| Karnataka Bank RD Interest Rates | 6.00% to 7.40% | 6.60% to 7.80% |
| Saraswat Bank RD Interest Rates | 5.75% to 7.25% | 6.25% to 7.75% |
| South Indian Bank RD Interest Rates | 5.00% to 7.25% | 5.50% to 7.75% |
| TMB RD Interest Rates | 6.00% to 7.50% | 6.00% to 8.00% |
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RD Interest Rates: Up to 3-Year Tenors
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RD Interest Rates: Up to 5-Year & more than 5-year Tenors
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Types of Recurring Deposit Interest Rates
Regular Savings Scheme – Banks offer recurring deposits to Indian citizens above the age of 18 years. Customers can choose to deposit a fixed sum of money for a period of time, usually between 6 months to 10 years. Interest can be computed on a simple or compound basis. At the end of the tenure, the lump sum amount can be withdrawn. Some schemes allow you to reinvest the money. You can open a recurring deposit for as little as Rs. 10 per month. The interest rates on the regular recurring deposits range between 4.75% to 8.50% p.a.
Junior RD Schemes – Banks also offer recurring deposit schemes for kids. Parents or guardians can open these deposits for their children to start saving for their future, education ,and other needs. Students can also avail themselves of these deposit schemes. Learning to handle finances and the importance of saving at a young age will help inculcate a smart sense of money. The interest earned on these deposits will either be equivalent to the regular RD schemes or be higher to encourage saving amongst the youngsters.
Senior Citizens RD Schemes – Banks offer higher rates of interest for senior citizens. Usually, 0.50% per annum is given over and above the prevailing interest rate. The interest rates range from 5.25% to 8.50% .There are also schemes available that are designed to help senior citizens during their retirement and old age.
NRE/NRO RD schemes – NRE and NRO recurring deposit accounts may be offered a lower interest rate. Furthermore, senior citizens who hold NRE/NRO accounts will not be offered an additional interest rate.
Special RD Schemes – Banks offer different schemes designed to suit the needs and capabilities of a variety of people. These schemes generally carry a higher rate of interest because your goal is more specific. ICICI Bank offers the iWish deposit, which allows you to contribute various amounts of money to your RD account. Furthermore, other people can also contribute to helping you reach your goals. There are RD schemes with free life insurance available. With certain schemes, you are allowed to withdraw the money in part without breaking the full deposit. Other schemes reward you with a larger lump sum amount which makes it a worthwhile investment.
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Benefits of RD Interest Rates
Safe investment – Recurring deposits carry no risk or very little at all. Choose a stable and secure bank to ensure that your money is safe. Recurring deposits are just a simple investment of your money and do not dabble in the markets. Therefore the interest rate will not fluctuate and you do not stand to lose any money.
Earn while you save – Your deposit will earn interest from your first contribution. The interest accumulated will increase through your tenure. The longer you invest, the more interest you will earn.
Lump sum payout – At the end of the RD tenure, you will receive a lump sum of cash. This amount includes your contribution plus the interest earned. You can use the money to reinvest it or spend it on what you were saving for.
Online access – Most banks offer Internet Banking services which you can use to open deposits, access your accounts and see the progress of your deposit. You can also view the different interest rates offered. You can pick the tenure and deposit amount suitable to you and also earn the highest interest offered.
Loan offers – When you have an RD with a bank, you sometimes get pre-approved loan offers. In other cases, your loan applications will be given preference and your processing might be faster. In addition to this, banks offer concessional interest rates on loans as well.
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Factors that may affect recurring deposit interest rates
Type of account – The account you hold will make a difference in the eligible interest rates. Regular savings accounts usually get higher interest rates than NRE or NRO accounts. Some banks offer the same interest rates to both account holders.
Tenure – The tenure of your deposit is one of the most important factors in determining the RD interest rate. Medium-term deposits generally earn a much higher interest rate. Some banks offer the highest rate on 10-year long-term deposits. But this is not always the case, as some banks also offer the same interest rate on a 1-year deposit as well as a 10-year deposit.
Age – Almost all banks offer a higher rate of interest to senior citizens. This rate is usually 0.5% per year higher than the regular interest rates. Junior accounts can also stand to earn a higher interest rate. This depends on the bank’s offer on minor accounts.
Choice of bank – Interest rates vary quite a bit between different banks. Currently, the top banks offer recurring deposits starting at 7% per year in interest. Nationalised banks tend to offer a higher interest rate of up to 7.50% per annum.
Schemes on offer – Banks also have different recurring deposit schemes running. Corporation Bank has a Millionaire Scheme on offer, wherein you will receive a million rupees at the end of the scheme. This deposit carries a very high interest rate of 9.25% per year. So the choice of your deposit scheme will also factor into the interest rate. Depending on the benefits offered with the RD scheme, your interest rate may vary.
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Benefits of RD Interest Rates
Safe investment – Recurring deposits carry no risk or very little at all. Choose a stable and secure bank to ensure that your money is safe. Recurring deposits are just a simple investment of your money and do not dabble in the markets. Therefore the interest rate will not fluctuate and you do not stand to lose any money.
Earn while you save – Your deposit will earn interest from your first contribution. The interest accumulated will increase through your tenure. The longer you invest, the more interest you will earn.
Lump sum payout – At the end of the RD tenure, you will receive a lump sum of cash. This amount includes your contribution plus the interest earned. You can use the money to reinvest it or spend it on what you were saving for.
Online access – Most banks offer Internet Banking services which you can use to open deposits, access your accounts and see the progress of your deposit. You can also view the different interest rates offered. You can pick the tenure and deposit amount suitable to you and also earn the highest interest offered.
Loan offers – When you have an RD with a bank, you sometimes get pre-approved loan offers. In other cases, your loan applications will be given preference and your processing might be faster. In addition to this, banks offer concessional interest rates on loans as well.
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Factors that may affect recurring deposit interest rates
Type of account – The account you hold will make a difference in the eligible interest rates. Regular savings accounts usually get higher interest rates than NRE or NRO accounts. Some banks offer the same interest rates to both account holders.
Tenure – The tenure of your deposit is one of the most important factors in determining the RD interest rate. Medium-term deposits generally earn a much higher interest rate. Some banks offer the highest rate on 10-year long-term deposits. But this is not always the case, as some banks also offer the same interest rate on a 1-year deposit as well as a 10-year deposit.
Age – Almost all banks offer a higher rate of interest to senior citizens. This rate is usually 0.5% per year higher than the regular interest rates. Junior accounts can also stand to earn a higher interest rate. This depends on the bank’s offer on minor accounts.
Choice of bank – Interest rates vary quite a bit between different banks. Currently, the top banks offer recurring deposits starting at 7% per year in interest. Nationalised banks tend to offer a higher interest rate of up to 7.50% per annum.
Schemes on offer – Banks also have different recurring deposit schemes running. Corporation Bank has a Millionaire Scheme on offer, wherein you will receive a million rupees at the end of the scheme. This deposit carries a very high interest rate of 9.25% per year. So the choice of your deposit scheme will also factor into the interest rate. Depending on the benefits offered with the RD scheme, your interest rate may vary.Check Your Credit Score for FREE
Features of using Recurring Deposit
Some of the features of using a Recurring deposit article are:
- Investing in RD inculcates the habit of saving
- You can start investing with Rs.500 which is the minimum amount most banks will require you to deposit. You can also gradually increase the deposit amount
- You can open an RD account for up to 10 years
- There are banks who may allow you to prematurely withdraw the amount from your RD account
- The interest rate offered is equivalent to what is offered for a fixed deposit
- You can give a standing instructions to the bank to automatically deduct the deposit amount from your bank account every month
Eligibility Criteria to Apply for RD
The following are the eligibility criteria that should be fulfilled to apply for an RD account:
- Individual must be a savings account holder
- Minors must be more than 10 years of age
- A legal guardian must be accompanied in case the minor is less than 10 years of age
- A government organisation can open an RD account
- A commercial organization, corporate, proprietorship, or company can also open an RD account .
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Documents required to Apply for RD
The following are the documents required to open an RD account:
Identity proof:
- Passport
- Government ID card
- Ration card
- Senior citizen ID card
- Driving license
Address proof:
- Electricity bill
- Telephone bill
- Passport
- ID card or any certificate issued by the Post Office
- Bank statement with cheque
How is the Interest Under the Recurring Deposit Scheme Calculated?
The rate of interest is taken into consideration in order to calculate the recurring deposit amount. Various factors such as amount invested, tenure, etc. are taken into consideration.
The formula to calculate RD is given below:
M = R [(1+i) n – 1]/ 1 – (1+i) -1/3
In the formula,
‘M’ stands for maturity value
‘R’ stands for monthly instalment
‘n’ stands for number of quarters
‘i’ stands for rate of interest/400
Recurring Deposit vs Fixed Deposit
Fixed Deposits and Recurring Deposits are among the most popular investment options in India. If you are planning to invest in either of these, you must be aware of the differences between Recurring Deposit and Fixed Deposits. It is very common for first-time investors to get confused between RD and FD. While both Recurring Deposit and fixed deposits are offered by most of the banks in India, each comes with its own advantages and disadvantages.
Before investing in a Recurring Deposit or Fixed Deposit scheme, you must be familiar with certain important features of the scheme such as the rate of interest and investment limit.
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Tax on Recurring Deposit Interest rates
Recurring Deposit is a very popular investment scheme amongst the risk-averse Indians mainly because of the good returns and savings benefits that it offers. In a Recurring Deposit scheme, you will have to deposit a fixed amount of money every month for a predefined period of time and the amount will fetch you interest.
But, for interest that you earn on Recurring Deposit investment amounts, 10% will be deducted as TDS. Also, the Tax Deducted at Source (TDS) will be 20% if the Pan information is not provided. The Tax Deducted at Source (TDS) varies depending on your annual income, your age and the interest that you accrue on your RD amount.
Check – Tax on RD Interest Rateshttps://www.youtube.com/embed/cobdL15W95I
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FAQs on RD Interest Rates
- What is the minimum amount required for opening a Recurring Deposit account? The minimum amount required for opening a Recurring Deposit account varies for every bank and it can be as low as Rs.10
- What will happen if I do not make my RD instalments on time? In case you fail to make your RD instalments on time, the bank has the right to close your RD account. The interest rate applicable will be as per the premature withdrawal policy of the lender.
- What are the documents required to open an RD account? To open an RD account, you have to submit the scanned copies of the documents like Know Your Customer (KYC) documents, identity proof, and recent passport size photographs.
- Can I cancel my RD account before the completion of the tenure? Yes, you can cancel your RD account before the completion of the specified tenure.
- How much interest can I earn through a Recurring Deposit account? The interest rate for Recurring Deposit differs from bank to bank. The amount of interest that you can earn depends on the amount you have deposited in the RD account, the tenure of the RD and the interest rate offered by your bank for that tenure.
- What happens if there is a change in the interest rate while I have an RD account open? When you open an RD account, the interest rate is fixed and will not change even if the interest rates fluctuate during the term of the account. Any changes will only be effective if you book a new RD account.
- How to open an RD account offline? You can open your RD account offline by visiting the bank branch where you have your savings account.
- What is the importance of checking Bank RD interest rate before opening an RD account? Checking RD interest rates before opening RD account is a vital factor to consider. Opt for those banks that offer high interest rates to obtain high returns on your investment. Customers should also check for those banks that levies low withdrawal penalty in case of premature withdrawal.
- Is the RD interest rate pre-fixed? Yes, the interest rates on RDs are pre-fixed just like fixed deposit accounts and the interest rates vary depending on the tenures. The interest rate is updated at regular intervals and the interest is compounded quarterly depending on the interest rate.
- Is interest earned on recurring deposit taxable? Yes, the interest earned recurring deposit is taxable.
- I have an RD account. Will it be possible for me to change the tenure and instalment date? No, once you have opened an RD account, you will not be able to change the tenure and instalment date. It will be recommended you close your existing RD account prematurely and open a new one.
- Is Tax Deduction at Source (TDS) applicable on the interest earned on Recurring Deposits? Yes, TDS of 10% is applicable on the interest earned on Recurring Deposits. The TDS will deducted if the interest earned on the Recurring Deposits is more than Rs.10,000.
- Can I pay more than one instalment at a time? Yes, you can make additional instalments one at a time. However, you must note that there will be no interest earned on the additional instalment.
- Do senior citizens get additional interest rates on an RD account? Yes, most banks offer additional interest rates on an RD account for senior citizens.
- Is the Post Office RD the same as any other bank-offered RD? Although the RD accounts provided by banks and the Post Office have the same basic functionality, there may be some variations in certain policies and rules.
- Are RD interest rates compounded quarterly? Yes, RD interest rates are compounded quarterly.
- Can I make use of the RD Calculator? Yes, you can use the RD calculators available on the official websites of various banks. By entering the desired amount and the repayment period into the RD calculator, you can determine the total amount you will receive when the loan matures.
- Is 5 years Recurring deposit tax-free? Under Section 80C of the Income Tax, 1961, investments in bank RD are not eligible for a tax exemption. Therefore, investing in any of the bank’s recurring deposits is not tax deductible. However, a five-year post office term deposit qualifies for a tax deduction under Section 80C of the Income Tax Act of 1961.
- Are SIPs/Mutual funds better than RD? SIPs are subject to market risks, whereas RDs are risk-free investments. When compared to RDs, mutual fund SIPs have higher potential returns. Over RD, mutual funds also enjoy a sizable tax advantage.
- Which one is preferable, RD or FD? FD appears to offer higher returns when returns in FD and RD are compared. The reason is that interest is paid out in accordance with the amount of money that the account holder deposits each month into the RD. In most cases, the FD amount is deposited just once in a lump sum and earns a higher interest rate.
- What drawbacks are there to RD? There are no returns if you withdraw during the lock-in period. Premature and partial withdrawal are subject to requirements and are subject to a penalty. The monthly payment amount is set. Comparing interest rates to other investment products, they are lower.
- Can I use the same bank account to open two RD accounts? Yes, recurring deposit accounts can be opened in the same bank using your savings account.
- What is the longest possible RD tenure? An RD account typically has a tenure of between six months and ten years. The maximum period for an RD is ten years.
- What happens when the RD matures? The entire RD amount along with the interest is paid in full to the linked savings account on the day the RD account matures.
- What is the penalty levied on missed payments? On missing the monthly instalments on RD account, depositors will have to pay a penalty amount of Rs.1.50 per Rs.100 per month.
- How is the maturity amount on RD calculated by the banks? The maturity amount on RD is calculated after considering some of the vital factors such as the instalment amount, tenure, and account type chosen by the depositor.
- What is the nomination facility in an RD account? The recurring deposit accounts enable depositors to select nominees so that in case of sudden demise of the account holder, the nominees get the entire RD amount. The bank allows one nominee per RD account even if it is joint RD account.
- What is a Flexi RD account? Flexi Recurring Deposit accounts are those RD accounts where depositors can deposit any amount higher than that what is contracted and continue that amount till maturity. Some bank even does not charge penalties on skipping instalments as well.
Courtsey To : Bankbazaar
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