The word 'Saving' holds a prominent place amongst most of the middle- class people in India. Most of the earning people in the country save their hard-earned money in one or the other form. In such a scenario, the recurring deposit which is also a form of saving instrument is quite popular amongst the investors who opt for medium to long term investment plans.
Investing in a recurring deposit or RD helps customers to enjoy three-fold benefits and they have guaranteed returns, liquidity and flexibility.
What is a Recurring Deposit?
A Recurring Deposit is a unique kind of term deposit offered by several banks both public and private, post office, financial institutions which helps people who have a regular source of income to deposit a fixed amount monthly towards the recurring deposit account. It is popularly known as RD (recurring deposit) account. This deposit will earn an interest rate which is compounded quarterly and it can be withdrawn on reaching the maturity date.
The rate of interest in case of an RD account usually depends on the fixed amount of deposit which an investor decides to pay and the period of the payment. Usually, the recurring deposit with higher sum and longer duration will fetch higher interest rates and vice versa. The interest rates offered for senior citizens will be slightly higher as compared with the one offered to normal citizens.
The recurring deposits are similar to the fixed deposit as a certain amount of funds will be deposited into the said account monthly and this deposit will mature on a specified future date which will fetch the investor the deposited principal amount along with the interest on it.
The special character of this account is it allows customers an opportunity to build up their savings regularly for a fixed tenure. The minimum period of a recurring deposit ranges between six months to ten years.
Let's find out the List of 5 Recurring Deposits with Best Interest Rates in India.
IndusInd Bank Recurring Deposit Account
The recurring deposit or RD offered by the IndusInd Bank which is one of the popular private sector banks in the country offers the best interest rates to its customers which stands at 7.75% per annum.
The recurring deposit account in IndusInd Bank can be opened by any of the individuals who reside in India. An RD can be opened with the bank with a minimum investment of Rs 500.
Features of Recurring Deposit of IndusInd Bank
• Investors can opt for a recurring deposit term which ranges between 12 - 120 months.
• An investor has to invest a fixed monthly instalment to the RD account either by cash or by submitting a standard order, or through ECS mandate.
• Tax Deducted at Source is applicable on interest earned on the RD account and this will be as per the income tax regulations.
• Nomination facility is available for this account
• If in case of emergency, the depositor can opt for premature closure of the account.
• The recurring deposit with the IndusInd Bank can be booked in multiples of 100 only.
YES Bank Recurring Deposit Account
YES Bank, which is one of the most leading private sector banks in India also offers the recurring deposit account facility to the general public to meet their financial goals in future.
The recurring deposit account at YES Bank fetches higher interest rate at 7.00% per annum for deposits which are in the range between 24 - 33 months and for senior citizens, the interest rate stands at 7.75% for the same tenure.
Features of YES Bank Recurring Deposit
• Depositors can book their Recurring Deposits online via the YES Bank's Net Banking facility.
• Investors can easily track the deposits regularly.
• The bank provides a standing instruction facility for investors which will result in automatic payment of monthly instalments from a savings account.
• The minimum amount of instalment can be Rs 1000 per month and in multiples of Rs 100.
• No upper limit on the maximum amount of monthly instalment for an RD account.
• Minimum tenure of the deposit is 6 months (and in multiples of 3 months thereafter) and maximum tenure is up to 10 years.
Ujjivan Small Finance Bank Recurring Deposit Account
The Ujjivan Small Finance Bank Limited is a wholly-owned subsidiary of Ujjivan Financial Services Limited (UFSL) and was set up on November 11, 2016, after receiving in-principle approval from RBI to set up a Small Finance Bank.
The bank offers an attractive interest rate of 6.95% per annum on the recurring deposits which are under Rs 2 crore and whose tenure ranges between 12 - 24 months.
Features of Ujjivan Small Finance Bank Recurring Deposit Account
• A minimum amount of deposit in a recurring deposit account is Rs 100 and in multiples of Rs 100 thereof.
• The interest rate will be calculated every quarter and will be paid to the holder only on maturity.
• Tenure of the RD deposit ranges between 6 months to 10 years
• The customers can avail premature closure facility offered by the bank
• Senior citizens are entitled to get an additional 0.5% interest rate on recurring deposit accounts.
• The RD account can be opened through mobile banking facility or net banking facility or at any of the branches of Ujjivan Small Finance Bank.
National Savings Recurring Deposit Account
The National Savings Recurring Deposit Account rolled out by the India Post is also one of the safe forms of investment. Backed by the government of India, this recurring deposit account carries an interest rate of 5.80% per annum from April 1, 2020, and is compounded every quarter.
Features of National Savings Recurring Deposit Account
• This RD account can be opened by any resident Indians at any of the post offices in India.
• The tenure of the deposit is 5 years from the date of opening. It can be extended for a period of further 5 years on applying at the relevant post office wherein the account was opened.
• The depositor can avail loan of up to 50% of the balance amount after one year of the lock-in period. It may be repaid in one lump sum along with the interest at the prescribed rate at any time during the tenure of the RD account.
• The minimum amount of deposit is Rs 100 per month or any amount in multiples of Rs 10 (No maximum limit on the deposited amount)
• The account can be transferred from one post office to another as per the convenience of the depositor.
• The account can be either opened by a single adult or a joint account (maximum of 3 adults) or a minor who is aged above 10 years or by a guardian on behalf of a minor or a person of unsound mind
• The account can be either opened on payment of cash or by depositing a cheque (the date of deposit in case of the cheque shall be the date of clearance of cheque)
• The depositor can open any number of accounts in any post office and there is no cap on it.
ICICI Bank Recurring Deposit Account
This recurring deposit offered by India's largest private sector bank offers an interest rate of 5.50% per annum for the tenure ranging between 3 - 10 years. For Senior Citizens, the interest rate will be higher compared to the one offered to normal citizens.
Features of ICICI Bank Recurring Deposit Account
• The minimum tenure of the RD is 6 months and in multiples of 3 months thereafter and up to a maximum period of 10 years.
• The interest rate on the RD account is subject to change solely at the discretion of the ICICI Bank, without prior notice.
• On delayed payment of instalment, the bank will levy penalty on the monthly interest at the rate of Rs 12 per Rs 1000.
• The total interest charged on the delayed instalment shall be recovered fully from the total amount of interest which is payable to the holder at the time of maturity.
• Nomination facility is available for the recurring deposit account.
• The premature withdrawal facility is available for the depositors and in such cases, interest rates will be calculated at the rate applicable for the period during which the deposit has stayed with the ICICI Bank.
• Penalty rates are applicable in case of premature withdrawal of RD account.
About the Author
Archana is a content writer at GoodReturns. She has been writing articles related to investment planning and personal finance for more than two years.