A Recurring Deposit (RD) of SBI is essentially a term deposit scheme that will offer you an opportunity to build up saving through regular monthly deposits of fixed sum over some time.
Interest rates under the SBI Recurring Deposit (RD) Scheme
The rate of interest under an RD scheme is the same as applicable to Term Deposits for Public and Senior Citizens.
|Deposit tenure||Interest Rates (PA) for Public||Interest Rates (PA) for Senior Citizens|
|1 year to less than 2 years||5.00%||5.50%|
|2 years to less than 3 years||5.10%||5.60%|
|3 years to less than 5 years||5.30%||5.80%|
|5 years to 10 years||5.40%||6.20%|
A Recurring Deposit (RD) is certainly qualitatively different from FDs, concerning an RD's flexibility. Under any FD scheme, you are needed to deposit the money in the post office or a bank, one time in a lump sum. But under an RD scheme in any bank, you can invest a fixed amount monthly to earn good interest on the amount.
Deposit tenure and deposit amount
In SBI, you can choose your deposit tenure or the period of deposit from a minimum of 12 months, to a maximum of 120 months. The minimum deposit amount under the Recurring Deposit (RD) is Rs. 100 per month which will be multiplied in Rs. 10, for further investments further. However, there is no upper limit or fixed maximum deposit amount for the scheme. After the maturity of your RD scheme, you will be paid a lumpsum amount - that is the regular investments along with the interest earned. Hence, an RD is a good systematic saving-cum-investment instrument for the citizens. With the regular deposit opportunity and good interest rates, RDs will provide you flexibility and ease of investments.
If you fail to deposit the monthly installment under the scheme, the SBI will charge a penalty on your investment. For accounts with a maturity period of 5 years and less, your penalty will be Rs. 1.50 per Rs. 100 per month. For accounts with a maturity period above 5 years, your penalty will be Rs. 2.00 per Rs. 100 per month. SBI levies an 'AA service charge' of Rs. 10 on the Recurring Deposit (RD) accounts paid out on or after the date of maturity, wherein there is the default in payment of 3 or more consecutive installments and the account has not been regularized. Your account will be closed permanently if you do not pay the monthly installment for 6 consecutive periods. In that case, your balance will be paid to you.