It will not be wrong to call this account as better finance management account as one can plan and deposit some part of his earnings on monthly basis for some pre-fixed term, thus this account enables better management and accumulation of one’s finances. Customer can expect to earn higher interest if one lets the money remain in the account for longer period though interest rates depends on prevailing market conditions.
Types of recurring deposit accounts
Key point is, RD accounts are open for individuals only.
Therefore, the RD accounts can be opened and operated under the outlined framework:
- Individual — Single Accounts
- Two or more individuals — Joint Accounts
- Illiterate Persons
- Blind Persons
- Differently abled individuals
The interest rates of the RD accounts are driven by the category under which you fall and the bank you choose. As per the laid guidelines, senior citizens may enjoy the benefit of higher interest rates as compared to regular citizens. Banks do have options or plans for juveniles, pupils and parents through which parents can induct savings habit at the early stage. Not only this, the banks come up with better and lucrative schemes for commoner to reach their financial goals.
Interest rates in various forms of recurring deposit
- Regular savings: Banks offer recurring deposits which are open for all Indian citizens who are 18 years and older. It is the sole discretion of the customer to choose the plan he wishes to invest in, normally the period starts being anywhere between 6 months to 10 years. Interest may be totalled on simple or compound basis. Upon term completion, the total amount can be withdrawn. Under some schemes and with some banks, one can be allowed to reinvest the money further. Just to make things easier, one can start with somes as little as Rs. 10 per month. The interest rate ranges between 7% to 8% per year.
- Junior: There are special provisions or schemes for children or minors. The parents or guardians can start depositing for their children for various future requirements such as education, marriage, financial security or freedom and further investment in property or something of choice for their children. Students can also avail of these deposit schemes.Banks offer better interest rates on these deposits to maintain engagement, instil savings habit and awareness about the banking system.
- Senior Citizens: In order to ensure sense of financial freedom and security, banks provide higher rate of interest for senior citizens. Normally, 0.50% per year is offered over and above the market interest rate. The interest rate starts from 7.5% to 9.25% per annum. Apart from higher rates, there are many bank offerings which are designed to support elderly.
- NRE: Such deposit account, maintained in rupees, is an excellent banking facility for NRIs to make great deal of savings by investing systematic sum of money in small sums every month. These accounts attract around 7.50% interest per annum.
- Special:Stiff competition in the BFSI sector and ever surging banking market has sort of compelled the banks to roll out offerings to suit the needs and financial capabilities of variety of people. These schemes generally carry a higher rate of interest as your goal is more specific. There are RD schemes with free life insurance available. With certain schemes, you are allowed to withdraw the money in part without breaking the full deposit. Other schemes benefit you with a bigger lump sum amount which makes it a worthwhile investment.
Minimum Amount of monthly instalment
Recurring deposits are spread into equal monthly instalments. The main EMI can be minimum Rs. 500/- for metro areas and for urban areas, semi rban areas branches it is Rs.100/- and in its multiples. Banks have not defined any capping or maximum limit.
- Instalments: One is required to pay the installment on or before last working day of every calendar month and if it is not so paid,penalties are imposed.
TDS on Recurring Deposits
As per amendments brought about in Finance Act 2015, TDS will be applicable for Recurring Deposits also.
Interest rates at glance by different banks
There is a stiff competition in the market and with penetration of the internet in the market; people have resorted in other forms of investment which yield better returns too for example: share market, mutual fund and tax free bonds. For apparent reasons, the deposit interest rates are sinking. But, in spite of the market conditions some banks are still able to capture the sizeable market in this product segment.We have tried to compile and provide insight on interest banks offerings.Howerver banks change these as per market conditions.
|Bank name||RD Interest Rates||RD rates senior citizen|
|Allahabad Bank||6.75% to 7.15%||7.25% to 7.65%|
|Andhra Bank||6.75% to 7.15%||7.25% to 7.65%|
|Bandhan Bank||7.75% to 8.25%||8.25% to 8.75%|
|Bank of Baroda||4.5% to 7%||5% to 7.5%|
|Bank of India||6.90% to 7.10%||6.90% to 7.10%|
|Bank of Maharashtra||6.5% to 6.8%||7% to 7.3%|
|Bharatiya Mahila Bank||7.00% to 7.25%||7.50% to 7.75%|
|Canara Bank||7% to 7.3%||7.5% to 8%|
|Central Bank of India||7.25% to 7.50%||7.25% to 7.50%|
|Citi Bank||6% - 6.25%||6% - 6.25%|
|City Union Bank||6.7% to 7.1%||6.95% to 7.5%|
|Corporation Bank||7% to 7.10%||7.5% to 7.6%|
|DBS Bank||6.25% to 8%||6.25% to 8%|
|Dena Bank||6.25% to 8%||6.25% to 8%|
|Deutsche Bank||6% to 7.75%||6.5% to 8%|
|Dhanalakshmi Bank||7% to 7.25%||7.25% to 7.5%|
|Federal Bank||7% to 7.35%||7.5% to 7.85%|
|HDFC Bank||6.25% to 7%||6.75% to 7.5%|
|ICICI Bank||6.25% to 7.10%||6.75% to 7.60%|
|IDBI Bank RD Rates||7% to 7.15%||7.5% to 7.65%|
|Indian Bank||5.75% to 6.5%||6.25% to 7%|
|Indian Overseas Bank||5.75% to 7.25%||6.25% to 7.75%|
|IndusInd Bank||7.25% to 7.35%||7.75% to 8.85%|
|Jammu and Kashmir Bank||7.25% to 7.3%||7.75% to 7.8%|
|Karnataka Bank||7% to 7.25%||7.5% to 7.75%|
|Karur Vysya Bank||7%||7.50%|
|Kotak Mahindra Bank||7% to 7.25%||7% to 7.75%|
|Lakshmi Vilas Bank||7.40% to 7.70%||7.40% to 7.70%|
|Nainital Bank||7.50% to 7.90%||8.00% to 8.40%|
|Oriental Bank of Commerce||7% to 7.15%||7% to 7.15%|
|Punjab and Sind Bank||6.6% to 7.1%||7.1% to 7.6%|
|Punjab National Bank||6.8% to 7.2%||7.3% to 7.7%|
|Saraswat Bank||7.15% to 7.25%||7.4% to 7.5%|
|South Indian Bank||7% to 7.50%||7.5% to 8.00%|
|State Bank of Bikaner and Jaipur||6.5% to 6.95%||7% to 7.45%|
|State Bank of Hyderabad||5.5% to 7%||5.5% to 7%|
|State Bank of India||6.5% to 6.95%||7% to 7.45%|
|State Bank of Mysore||6.5% to 7%||7% to 7.5%|
|State Bank Of Travancore||6.5% to 6.95%||7% to 7.45%|
|Syndicate Bank||6.5% to 7%||6.5% to 7%|
|Tamilnad Mercantile Bank||7% to 7.15%||7% to 7.65%|
|UCO Bank||7.25% to 7.5%||7.25% to 7.5%|
|Union Bank of India||7.25% to 7.4%||7.25% to 7.4%|
|United Bank of India||5.75% to 6.75%||5.5% to 6.5%|
|Vijaya Bank||7.00% to 7.50%||7.00% to 8.00%|
|Yes Bank||6.75% to 7.10%||7.25% to 7.6%|