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Recurring Deposit: Everything you Wanted to Know!

A recurring deposit is a special type of term deposit. These specialized term deposit schemes are usually offered by banks. The most popular banks offering recurring deposits are State Bank of India (SBI), HDFC, etc. In fact, post offices also offer these kinds of specialized term deposit schemes. In this article, I’ll walk you through the various queries you were searching for.


If you are looking for the answer of all these questions or some of these questions, please continue reading.

What is a recurring deposit?

Recurring Deposit (or RD in short) is a special type of term deposit. You have to save a pre-specified amount of money at periodic intervals (usually, monthly) for a long period of time (say, 5-years, 10 years, etc.). 


You can open banks recurring deposit accounts either at banks or post offices. Some of the best interest rates on RDs are provided by:

  • SBI RD account
  • HDFC Bank
  • Axis Bank
  • Yes Bank
  • Bank of India
  • Bank of America
  • Post Office, and other bank RD accounts.


You can use a recurring deposit calculator to know how much money you’ll get at the end of the maturity period. To keep your account active, you have to keep making consecutive installments for the entire period till maturity. You can open an RD account online. A premature withdrawal facility is also available in most of these recurring deposit accounts. Inquire about these aspects while opening an RD with your bank. 

How does Recurring Deposit Work?

You can open recurring deposit accounts at any bank or post office. This account pays you an interest rate on the amount of money (which is predetermined at the time of opening an RD) you invest on a monthly basis. 


The period of recurring deposit RD can be anything from 6 months to 10 years. The rate of interest paid by the bank to an RD account holder varies on the basis of the time period invested. The longer you invest, the more interest you earn. The interest rate calculation of recurring deposits is done on a quarterly basis and not yearly. 


The minimum deposit amount you can contribute to RD accounts every month is Rs. 100. The interest-bearing RD will help you to build a fund at the end of the maturity period by contributing small amounts of money every month. 


  • You can earn bank RD interest rates (varying from 2.5% to 7%) on your pre-determined monthly deposits. Senior citizens get more interest rates on their recurring deposits. 


  • In fact, you can also choose RDs that have multiple tenures with varying interest rates. They are called Flexis deposit (recurring) schemes. In Flexi RD accounts, you’ll have to make an initial core deposit amount during opening it. In addition, you have to make monthly installment deposits, on the basis of your fund availability. This variable component of recurring deposits is incremental in specific multiples. However, there is an upper limit on the amount you can deposit every month.


You can give standing instructions to your bank (either through net banking, mobile banking or visiting your bank branch) to deduct a certain amount of money from your bank account (savings account, current account, or salary account) and credit it to the Recurring Deposit account for a certain period of time. 


The maturity value will be mentioned at the time you open a recurring deposit account. It is assumed that you’ll regularly pay all the monthly installments on due dates. In case, you are unable to pay any installment, the interest rate for that particular month will be deducted from the maturity value as a penalty. 


RD accounts (just like Fixed Deposit or FD accounts) are subjected to 10% TDS (Tax Deducted at Source) if the interest earned is more than Rs. 10,000 in a financial year. The bank will deduct the TDS amount from the maturity amount at the time of maturity. 

What is Recurring Deposit in SBI?

RD rates at SBI vary from time to time and on the basis of the time period deposited. While the minimum and maximum RD periods are 12-months (1-year) and 120 months (10-years) respectively. The minimum deposit amount is RS. 100. 


For general citizens, the current RD rate varies from 5% to 5.4% up to a deposit of Rs. 2 crores. Senior citizens receive an additional 0.5%. Any Indian citizen or NRIs (non-resident Indians) can open e-RD accounts on SBI. 

What is Recurring Deposit in HDFC?

While the minimum and maximum RD periods are 6-months and 120 months (10-years) respectively. The minimum deposit amount is RS. 100. 


For general citizens, the current RD rate varies from 3.5% to 5.5% up to a deposit of Rs. 2 crores. RD rates at HDFC vary from time to time and on the basis of the time period deposited. Senior citizens receive an additional 0.5% on their RD accounts. Any Indian citizen, Hindu Undivided Families (HUF), Private Company, Public Limited Company, Trust, or Society can open online recurring deposit accounts on HDFC. 

What is Recurring Deposit in Post Office?

The post office recurring deposit period is of 60 months (5-years).  The minimum deposit amount is RS. 100. The current RD rate is 5.8% per annum, which is compounded quarterly. Premature closure with a penalty can be done only after 3-years. 

How to Open Recurring Deposit Account?

You can open an RD account either online or offline. Almost all banks in India allow their users to open an RD account with them. You can either visit their branches and fill up the requisite forms or open an account online. To receive TDS exemption on the interest earned from RDs, you’ve to submit Form 15G/15H. Download forms from the website of the requisite bank  

Invest in Recurring Deposit Account

Yes, you should definitely invest in recurring deposits to create a fund (and also earn an interest rate on it) over a long period of time, ranging from 6 months to 10 years. You can use this fund for paying off your outstanding credit card bills, bank home loan, personal loan debts, travel insurance, education loans, car loans, life insurance, loan against property, gold loan, and many more. Use an RD calculator to know how much you have to invest in monthly installments to get your desired amount of money.


Whether phone banking or personal banking, you can open your RD account in almost any bank. Some of the most important banks to open your recurring deposit account through internet banking are ICICI banks, Kotak Mahindra Bank, Axis Bank, SBI, HDFC, and others. 


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You can also diversify your crypto coin portfolio by including other cryptocurrencies such as Bitcoin Ether ETH, Bitcoin Gold, Bitcoin Cash BCH, Basic Attention Token, Ethereum Classic, Binance Coin, Kusuma Network coin, Wrapped Bitcoin (some also call it wrap bitcoin or wBTC), USD Coin, Binance Smart Chain BSC coins, Gemini Dollar, ERC20 tokens (created on Ethereum blockchain), NFTs, and others. 


You can buy cryptos through cryptocurrency exchanges with the use of debit cards or credit cards (Visa cards) or bank funds transfer. Once bought, you can transfer the bought cryptos to your wallet network for better safety. 


Also, invest in various types of stocks (including dividend yield stocks), sovereign gold, post office RD, Sukanya Samriddhi, Pradhan Mantri Pension Yojana and Bima Yojana, mutual funds, index funds, real estate, venture capital, private equity, and other savings schemes to improve your personal finance. If possible, get help from a portfolio manager or wealth management firm for investment advice and get maximum return. 

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