Recurring deposits are one of the best ways to save money every month. In fact, it helps to inculcate the savings habit. You must set aside money every month to save. You can opt for the tenure and the amount depending on your ability to save.
|Bank Name||1 Years||2 Years||3 Years||4 Years||5 Years||5+ Years|
|AU Small Finance Bank||6.50%||7.05%||7.25%||7.00%||7.00%||7.00%|
|Capital Small Finance Bank||6.00%||6.50%||6.50%||6.50%||6.50%||6.50%|
|Equitas Small Finance Bank||6.60%||7.10%||7.15%||7.15%||6.75%||6.75%|
|ESAF Small Finance Bank||6.25%||7.50%||7.25%||7.00%||7.00%||7.00%|
|Fincare Small Finance Bank||6.25%||6.95%||7.10%||7.30%||7.30%||7.50%|
|Jana Small Finance Bank||7.00%||7.75%||8.00%||8.00%||7.00%||7.50%|
|North East Small Finance Bank||5.50%||7.50%||8.00%||8.00%||7.00%||7.00%|
|Suryoday Small Finance Bank||7.00%||7.25%||7.50%||7.75%||7.75%||9.00%|
|Ujjivan Small Finance Bank||5.65%||6.95%||6.95%||6.50%||6.25%||6.25%|
|Utkarsh Small Finance Bank||6.50%||7.75%||7.75%||7.75%||7.75%||7.75%|
RDs or recurring deposits are the most simplest form of investments.
Let us say that you want to invest Rs 1000 every month. You can either open an account online or you can walk into any of the branches of a bank. If you opt for paying Rs 1000 every month after the 12th month, you would get Rs 12,000, plus accumulated interest.
You can choose a size of your amount or you can decide a lumpsum which you require at a future date. Say for example, you require a lumpsum amount after 1 year of Rs 1 lakh. Therefore, you can save Rs 8000 each month and the bank would also give you an interest on the same.
Yes there is a TDS that is applicable. In fact, the interest amount is very much taxable, like a bank deposit. Any interest over and above Rs 10,000 will attract a TDS. The tax deducted at source would be 10 per cent, just like bank deposits.
Recurring deposits are the best way to save for the future. For example, if you anticipate marriage 2 years down the line, you can start putting in RDS for the nest 24-months. By the end of the tenure you would receive a lumpsum to meet expenses.
If you have gathered a decent sum after 1 year, you can place the same in a fixed deposit and continue your RD a fresh. You will not believe the amount you can save. Do not forget the interest component.
We suggest that you take a more longer term tenure of say 2 years at the very least.
- Recurring deposit is one of the best product to offer an applicant with regular income to grow up their saving through the deposit of fixed amount every month to earn attractive interest.
- FD is highly rigid and it is for a long period as compared to RD. RD gives more flexibility to all the individuals who earn monthly income.
- RD is the perfect saving opportunity for all the individuals with all income categories.
- Almost all the banks of India offers RD account with competitive interest rates.
- At the time of maturity, monthly deposits and interest rates are earned by the applicant.
- Investors for whom 1% of the deposit rate of the bank is paying on the RD are eligible for tax relief on RD only if they invest through India Post.
- In case of emergency, the applicant can break RD before maturity but after that, the account will be closed.
- Premature withdrawals are only granted by post offices if the applicant has an RD account with them for at least 1 year.
- Maturity depends on the monthly deposits and duration you make in RD.
- The RD account will be permanently deactivated or closed if the applicant fails to pay the amount for the consecutive months. The account remains closed until the applicant pays the outstanding amount.
- In RD the interest rates offered by small finance banks are generally higher as compared to commercial banks and post offices.
- Most of the small finance banks offer interest rate from 5.60%-9.60% per annum on RD.
- As compared to other banks SBI has lowered the interest rates of RD on a medium-term and long-term basis. SBI interest rates start from 6.4%-7% and a further 0.50% points hike for senior citizens only.
- Applicants who have opened their RD account in the post office are allowed to make one withdrawal up to 50% of the balance after one year. But this withdrawal should be repaid in lump-sum amount along with the interest amount with no time limit.
- The applicant who has RD account in post office will get an annual interest of 7.3%.
- KYC documents if needed.
- Identity proof: Aadhar/PAN/ Driving License
- Application form of the bank to open an RD account
- Passport size photographs of the applicant.
- A flexible method of monthly deposits of a minimum of Rs 10/-
- Passbooks are issued.
- TDS is deducted if the interest earned on RD exceeds Rs 40,000 a year.
- The minimum period of deposit 12 months and maximum 10 year
- Nominee facility available
- Rate of interest is available
- RD is helpful to take loan up to 90% against the balance in RD account.
- Flexible Recurring Deposit Schemes allow deposits of any amount at any time.
- Safe investment option with guaranteed returns
- Most of the banks offer RD products through net banking, Investors can make a deposit online without any hassle.
-RD is not flexible, the applicant will not be able to change the monthly investment amount.
- Withdrawals from a Recurring Deposit Account before the end of tenure may attract a penalty or lower the interest rates. Also, instant withdrawals may not be possible in case of a financial emergency.
- Interest Rates are low when compared to the Fixed Deposit. Applicants get a rate of up to 9% for Fixed Deposits whereas it varies from 7.5% to 8% for Recurring deposits.
- Recurring Deposits offer guaranteed but low returns when compared to other popular investment schemes like Mutual Funds and SIPs.
Investment options for NRI applicants might be NRE Contractual deposit or NRO deposits contractual. Let's see what those means and what are the offers for NRI
NRE RD Accounts- The NRE account must be used only to invest in your deposit instalments. NRE is external accounts that are non-resident. NRE RD interest is tax-free in India and can be recover without any charge.
NRO RD ACCOUNTS- For these accounts investment in deposit instalments may emerge from either NRE or NRO accounts. NRO is ordinary non-resident accounts. NRO RD interest is taxable at a rate of 30%, plus the additional CESS. This can be recovered subject to certain requirements.
WHICH ONE IS GOOD NRE RD or NRO RD
The source of investment is therefore a determining factor in which you can get an option to choose between NRE and NRO.
For instance, if your funding comes from an overseas origin then you should prefer NRE RD. Whereas you can put the same into NRO RD accounts if you receive your regular rental payments or any other source of income in India.
INTEREST CALCULATION OF RD FOR NRI
IMPORTANT POINTS FOR NRI BEFORE INVESTING IN RD
IS RD TAX AVAILABLE?
Yes TDS is charged in RD for both banks and post offices. It has been raised from Rs 10,000 to Rs 40,000 according to the Interim Budget proposals for 2019-20.
WHICH IS BETTER RD OR SIP(Systematic Investment Platform)?
RD is good but premature withdrawal will affect penalty charges. But in terms of SIP, it can be closed anytime and the money can be withdrawn without any penalty charges.
CAN RD BE EXTENDED?
The applicant can only extend his account only if he/she will pay 60 monthly instalments for 5 years. However, it will be considered as a fresh account and no extra charge has to provide by the applicant.
HOW TO OPEN RD IN POST-OFFICE?
The minimum amount needed for opening a post-office RD is Rs 10/month or any amount in multiples of Rs 5 but the tenure of investment will be 5 years. The applicant can open an RD account by visiting any of the nearest post-office.