8.2%, Senior Citizens Earn Extra 0.5%; Is This SFB's Recurring Deposits Rates Better Than Post Office Scheme

Unlike fixed deposits, recurring deposits are a regular investment option where depositors can deposit regular incomes and earn returns on them at fixed interest rates. Best way to describe recurring deposits is that they are small investments which lead to bigger returns. The rates vary from bank to bank. However, just this week, a small finance bank has revised its interest rates for recurring deposits less than Rs 2 crore, offering as high as 8.2% on 1-year tenure. This SFB's rates are far better than the post office recurring deposits account. This SFB is none other than Equitas Small Finance Bank.

Equitas Small Finance Bank:

Here, investment can start with as minimum as Rs 1,000 with tenure options ranging from 12 months to 10 years.

Under Recurring deposits, with effect from August 21, Equitas is offering as high as 8.20% on tenures like 12 months, 15 months, and 18 months respectively. While the bank is offering 8% rate on 30 months and 36 monhts.

The SFB is also offering 7.75% on 21 months, 24 months, and 30 months maturities. Also, an interest rate of 7.50% is offered on 48 months. Lastly, the bank is offering 7.25% rate on 60 months, 90 months and 120 months.

Notably, senior citizens are in for a treat as Equitas SFB is offering 0.50% extra to elderlies on the interest rates mentioned.

That being said, the 8.20% rate which is offered to normal individuals for 12 months tenure, is higher to 8.70% (8.20 + 0.50_ for senior citizens.

Equitas on its website said, "With an automatic monthly deposit, you'll be one step closer to achieving your bucket list and living the life you have always dreamed of. With best-in-class interest rates and flexible tenure options, you can trust your money is in good hands. Take action today and start building the life you deserve. Open your RD account now!"

In this account, interest on NRE deposits will be payable only on completion of a minimum tenure of 1 year. However, it also needs to be noted that tax deducted at source (TDS) will be deducted on recurring deposits as applicable.

Post Office Recurring Deposit Account (RD):

The India Post-backed 5-Year Post Office Recurring Deposit Account (RD) is currently offering 6.5% rate to investors with effect from July 7, 2023. The minimum investment is Rs 100 per month or any amount in multiples of Rs 10. There are no maximum limit for RDs.

Some of the features of this account is:

- Account can be opened by cash/cheque and in case of cheque the date of deposit shall be date of clearance of cheque.

- If an RD account is not discontinued can made advance deposit up to 5 years in an account.

- After 12 installments deposited and account is continued for 1 year not discontinued depositor may avail loan facility up to 50% of the balance credit in the account.

- RD Account can be closed prematurely after 3 years from the date of account opening by submitting prescribed application form at concerned Post Office.

- The maturity period of the account is 5 years (60 months). Account can be extended for further 5 years by giving application at concerned Post Office. Interest rate applicable during extension will be the interest rate at which account was originally opened.

Who is offering better returns?

Equitas SFB's recurring deposits is offering 7.25% rate on 60 months tenure, far better than Post Office-backed scheme. Also, this normal rate rises to 7.75% for senior citizens at Equitas. Apart from this, the SFB is offering much higher rates than compared to Post Office's Recurring Deposits Account.