Highest Interest Rate on Recurring Deposits (RD) – February 2020

Recurring deposits (RD) with banks are one of the most popular investment options for people with regular income. RD enables to deposit fixed amount every month for a pre-defined period which earns interest similar to Fixed Deposits (FD).

You might want to bookmark this page as the RD interest rates would be updated every month which would help you in better decision making.

All about Recurring Deposits:

  • Most banks offer RDs for tenure of 6 months to 10 Years
  • The tenure of RD can be in multiple of 3 months
  • The amount of installment and number of installment cannot be changed after opening of the account
  • The interest on RD compounds quarterly
  • In most cases the interest rate on RD is similar to Fixed Deposits offered by Banks for similar tenures. However some banks like Bank of India gives 0.5% extra interest rate for RD as compared to FD for similar tenure
  • The minimum deposit amount can be as low as Rs 100 per month, though some banks may have higher limit
  • There can be penalty for missing even one installment.
  • In case you miss multiple installments the RD can be closed and amount returned to you
  • Most banks offer Loan/Overdraft against the amount available in Recurring Deposit. The interest is generally 0.5% to 1% more than that offered to RD.
  • There are penalty clauses for pre-mature withdrawal similar to Fixed Deposits

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Recurring Deposit Interest Rates:

Following are the highest Interest rates on Recurring Deposits based on duration:

  1. For RD duration of 1 Year Lakshmi Vilas Bank offers 7.50%
  2. For 2 years Lakshmi Vilas Bank offers 7.50%
  3. For 3 to 4 Years the best interest rate offer is by DCB Bank at 7.70% 
  4. For 5 Years RD duration the best interest is offered at 7.75% by  Deutsche Bank
  5. For 5+ Years RD duration the best interest is offered at 7.35% by Ratnakar Bank
  6. The Post Office offers 5 Year Recurring Deposit Scheme offering 7.20% interest rate.

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The table below gives the Interest Rates sorted by Bank Name. The best interest rates for all duration have been highlighted.

Banks1 Years2 Years3 Years4 Years5 Years5+ Years
Allahabad Bank6.75%6.60%6.50%6.50%6.50%6.50%
Andhra Bank6.00%6.00%6.10%6.10%6.10%6.10%
Axis Bank6.55%6.50%6.50%6.50%6.50%6.50%
Bandhan Bank6.95%6.95%6.95%6.75%6.75%6.75%
Bank of Baroda6.10%6.10%6.10%6.25%6.25%6.10%
Bank of India6.40%6.25%6.25%6.25%6.25%6.25%
Bank of Maharashtra6.00%6.00%5.75%5.50%5.50%5.50%
Canara Bank6.30%6.00%6.25%6.25%6.25%6.25%
Catholic Syrian Bank6.50%6.25%6.25%6.25%6.25%6.25%
Central Bank of India6.25%6.20%6.20%6.20%6.20%6.20%
Citibank4.75%5.00%xxxx
City Union Bank6.60%6.35%6.35%6.35%6.35%6.30%
Corporation Bank6.50%6.40%6.35%6.35%6.35%6.35%
DCB Bank7.25%7.40%7.70%7.50%7.50%7.25%
Deutsche Bank7.00%7.00%7.25%7.50%7.75%x
Dhanalakshmi Bank6.90%6.90%6.50%6.50%6.50%6.50%
Digibank by DBS6.50%6.25%6.50%6.50%6.50%6.50%
Federal Bank6.50%6.50%6.50%6.50%6.50%6.50%
HDFC Bank6.30%6.40%6.40%6.30%6.30%6.30%
ICICI Bank6.30%6.30%6.40%6.40%6.40%6.40%
IDBI Bank6.40%6.35%6.25%6.25%6.25%6.25%
IDFC First Bank7.25%7.25%7.25%7.20%7.20%7.20%
Indian Bank6.30%6.30%6.25%6.25%6.25%6.25%
Indian Overseas Bank6.25%6.35%6.25%6.25%6.25%6.25%
Indus Ind Bank6.65%6.75%6.75%6.75%6.75%6.65%
J&K Bank6.25%6.30%6.30%6.25%6.00%6.00%
Karnataka Bank6.50%6.50%6.40%6.40%6.40%6.30%
Karur Vysya Bank6.35%6.45%6.45%6.45%6.45%6.45%
Kotak Mahindra Bank6.10%6.00%6.00%6.00%6.00%5.90%
Lakshmi Vilas Bank7.50%7.50%7.50%7.50%7.25%7.25%
Oriental Bank of Commerce6.25%6.25%6.25%6.25%6.25%6.25%
Post Office 5 Year RDxxxx7.20%x
Punjab and Sind Bank6.45%6.45%6.45%6.45%6.45%6.45%
Punjab National Bank6.30%6.30%6.25%6.25%6.25%6.30%
Ratnakar Bank7.40%7.45%7.45%7.20%7.35%7.35%
South Indian Bank6.55%6.70%6.50%6.50%6.50%6.50%
Standard Charted Bank6.50%6.60%xxxx
State Bank of India6.00%6.00%6.00%6.00%6.00%6.00%
Syndicate Bank6.30%6.30%6.25%6.25%6.25%6.25%
Tamilnad Mercantile Bank6.60%6.75%6.75%6.60%6.60%6.60%
UCO Bank6.30%6.30%6.30%6.25%6.25%6.25%
Union Bank of India6.30%6.30%6.30%6.30%6.30%6.30%
United Bank of India6.50%6.25%6.25%6.00%6.00%6.00%
Yes Bank7.25%7.25%7.25%7.25%7.25%7.25%

[box type=”Info” size=”Medium” style=”Rounded” border=”Full” icon=”info”]Last Updated: February 8, 2020[/box]Source: Bank Websites

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Disclaimer: The Recurring Deposit Interest Rates keep on changing. You are advised to check the interest rates with banks before making your RD.

Who should open Recurring Deposit?

Recurring Deposit suits people with regular income and who want to accumulate a fixed amount for certain time frame.

It’s also for people who do not have lump sum amount to take advantage of high interest rates. Those can open a long term RD which offers same interest rate as FD and keep on depositing money regularly. But if you need to put a lump-sum amount use fixed deposit.

Highest Interest Rate on Recurring Deposits - February 2020
Highest Interest Rate on Recurring Deposits – February 2020

Tax on Recurring Deposits:

In case of RD the interest received is added to the income and taxed at marginal tax slab.

TDS (Tax deduction at source) at the rate of 10% is deducted, if the interest income is more than Rs 40,000 in financial year per bank (changed from Rs 10,000 limit in Budget 2019). In case of Senior citizens TDS would be deducted at the rate of 10%, if the interest income exceeds Rs 50,000. This interest would be added across all branches of a bank and across all RDs/FDs for a customer to calculate the TDS.

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