In order to encourage flexibility in recurring deposit, banks have come up with a product called Flexi Recurring Deposit (RD). The features of Flexi RD is very much similar to recurring deposit features.
Many bank customers face difficulty in RD as the amount will be fixed till the maturity of RD.
For the benefit such customers, Flexi Recurring Deposits can be helpful as they can deposit the amount as per the availability.
There are banks which provide Flexi deposit options such as I Wish from ICICI Bank, SBI Flexi Deposit scheme, PNB Swecha Jama Yojna.
To open an Flexi RD account, you should have a savings account or current account with that bank to transfer the amount. After the maturity the amount will transferred to linked account.
Flexi RDs are subject to Tax Deducted at Source. A TDS of 10 per cent will be deducted on the interest you earn on your recurring deposit for an amount more than Rs 10, 000.
Here are 5 features which makes it attractive:
1. There will a minimum amount which should be deposited every month on a particular date. While, there will be no upper limit for the deposit.
2. Flexi Recurring Deposit has to be opened with a core amount and variable amount can be added as per availability.
3. However, an individual cannot deposit more than a certain amount as suggested by the bank. Say, as per SBI flexi deposit, it does not allow you to deposit more than Rs 50,000 in a year.
4. Interest rate for the core deposit will be applicable as per RD rates tenure. For the variable amount the rate will be applicable from the date of deposit.
5. There will be penalty if the core amount is not deposited on that particular day. The same is not applicable for the variable amount.
The added advantage of investing in Flexi RD is you get to save money as and when it is available with you and the money can be cut short in coming months in case of shortage of money.
Many individuals who do not have regular income such as proprietors of small businesses or professionals can consider investing in Flexi RD which are offered by many banks.