We compare the Recurring Deposit Interest Rates (or RD Interest Rates) across 40 major banks in India so that you can invest in the best RD. Recurring Deposit is very popular way to save money especially for people with regular income or house wives. This is because RD forces you to save a fixed amount for pre-defined period. At maturity you are paid the accumulated amount which you can put to good use. For e.g. if you deposit Rs 1,000 every month for 5 years at 7%, you would get about Rs 72,000 at maturity.
You might want to bookmark this page as the RD interest rates would be updated every month which would help you in making better decision.
- 1 Recurring Deposit Features
- 2 Recurring Deposit Interest Rates
- 3 Small Banks RD Interest Rates
- 4 Calculate RD Interest
- 5 Helpful Posts on Recurring Deposits
- 6 Who should open Recurring Deposit Account?
- 7 Recurring Deposit or Fixed Deposit?
- 8 Tax on Recurring Deposit Interest Rates
- 9 Recurring Deposit Interest Rates FAQs
- 9.1 ✅Which is the best recurring deposit scheme in India?
- 9.2 ✅What is the top Recurring Deposit Interest Rates for 1 to 2 years in banks?
- 9.3 ✅What is the top Recurring Deposit Interest Rates for 5 years in banks?
- 9.4 ✅What is the maximum tenure of bank recurring deposits?
- 9.5 ✅Are Bank Recurring Deposit safe?
- 9.6 ✅How is interest on Recurring Deposit taxed?
- 9.7 ✅Can I get loan on my Recurring deposit?
Recurring Deposit Features
- 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 instalment and number of instalment cannot be changed after opening of the account
- The interest on RD compounds quarterly
- In most cases the RD interest rate 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 instalment.
- In case you miss multiple instalments 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
Recurring Deposit Interest Rates
Following are the highest Interest rates on Recurring Deposits based on duration:
- For RD duration of 1 Year IDFC First Bank offers 7.25%
- For 2 years IDFC FirstBank offers 7.25%
- For 3 to 4 Years the best interest rate offer is by DCB Bank at 7.35%
- For 5 Years RD duration the best interest is offered at 7.35% by DCB Bank
- For 5+ Years RD duration the best interest is offered at 7.35% by DCB Bank
- The Post Office offers 5 Year Recurring Deposit Scheme offering 5.80% interest rate.
DCB Bank, IDFC First Bank, IndusInd Bank & RBL Bank generally offers best recurring deposit interest rates.
The table below gives the Interest Rates sorted by Bank Name. The best interest rates for all duration have been highlighted.
|Banks||1 Years||2 Years||3 Years||4 Years||5 Years||5+ Years|
|Bank of Baroda||5.10%||5.10%||5.30%||5.30%||5.30%||5.30%|
|Bank of India||5.50%||5.50%||5.40%||5.40%||5.40%||5.40%|
|Bank of Maharashtra||5.25%||5.25%||5.25%||5.25%||5.25%||5.25%|
|Central Bank of India||5.35%||5.35%||5.35%||5.35%||5.35%||5.35%|
|City Union Bank||5.50%||5.75%||5.75%||5.50%||5.50%||5.25%|
|IDFC First Bank||7.25%||7.25%||7.25%||7.20%||7.20%||7.20%|
|Indian Overseas Bank||5.70%||5.70%||5.70%||5.70%||5.70%||5.70%|
|Jammu & Kashmir Bank||5.50%||5.50%||5.50%||5.50%||5.50%||5.50%|
|Karur Vysya Bank||5.80%||5.85%||6.00%||6.00%||6.00%||6.00%|
|Kotak Mahindra Bank||5.15%||4.90%||4.75%||4.75%||4.50%||4.50%|
|Lakshmi Vilas Bank||6.25%||6.25%||6.10%||6.10%||6.10%||6.10%|
|Post Office RD||x||x||x||x||5.80%||x|
|Punjab and Sind Bank||5.55%||5.55%||5.55%||5.55%||5.55%||5.55%|
|Punjab National Bank||5.25%||5.25%||5.25%||5.30%||5.30%||5.30%|
|South Indian Bank||5.70%||5.70%||5.70%||5.70%||5.70%||5.70%|
|Standard Charted Bank||6.20%||6.20%||6.00%||6.00%||6.00%||x|
|State Bank of India||5.10%||5.10%||5.30%||5.30%||5.40%||5.40%|
|Tamilnad Mercantile Bank||6.10%||6.00%||5.90%||5.90%||5.90%||5.90%|
|Union Bank of India||5.40%||5.40%||5.40%||5.45%||5.45%||5.45%|
Disclaimer: The Recurring Deposit Interest Rates keep on changing. You are advised to check the interest rates with banks before making your RD.
Last Updated: July 5, 2020 Source: Bank Websites
Small Banks RD Interest Rates
The table below compares the interest rate offered by Small banks to that of SBI. The difference is substantial for mid-tenure deposits.
|Banks||<1 year||1 Year||2 Years||3 Years||4 Years||5 Years||5 Year+|
|AU Small Finance Bank||6.50%||7.05%||7.25%||7.00%||7.00%||7.00%||7.00%|
|Capital Small Finance Bank||6.00%||6.50%||6.50%||6.50%||6.50%||6.50%||6.25%|
|Equitas Small Finance Bank||6.60%||7.10%||7.15%||7.15%||6.75%||6.75%||6.75%|
|ESAF Small Finance Bank||6.25%||7.50%||7.25%||7.00%||7.00%||7.00%||6.50%|
|Fincare Small Finance Bank||6.25%||6.95%||7.10%||7.30%||7.30%||7.50%||6.50%|
|Jana Small Finance Bank||7.00%||7.75%||8.00%||8.00%||7.00%||7.50%||6.50%|
|Suryoday Small Finance Bank||7.00%||7.25%||7.50%||7.75%||7.75%||9.00%||7.25%|
|Ujjivan Small Finance Bank||5.65%||6.95%||6.95%||6.50%||6.25%||6.25%||6.00%|
|Utkarsh Small Finance Bank||6.50%||7.75%||7.75%||7.75%||7.75%||7.75%||7.75%|
|North East Small Finance Bank||5.50%||7.50%||8.00%||8.00%||7.00%||7.00%||6.50%|
Should you Invest in Small Bank RDs?
All the small banks listed above have 2% to 3% higher RD interest rates as compared to SBI and other bigger banks. The question is should you invest in them. My take is all the above banks are new but well regulated by RBI. You can invest up to Rs 5 lakh in these banks as that is the amount insured. The only thing to keep in mind is to keep eyes and ears open for any events that may adversely impact the bank.
Calculate RD Interest
The interest on bank’s Recurring Deposit is compounded quarterly and is computed using the formula below.
M=R[(1+i) (n-1)]/1-(1+i)(-1/3)) Where, M = Maturity value R = Monthly Instalment [60 for Post office RD] N = number of quarters (tenure) [20 for Post office RD] i = Rate of interest/400
Helpful Posts on Recurring Deposits
- Which bank offers Highest Interest Rate on Bank FD?
- 13 Most Important things to know before investing in Bank Fixed Deposits
- Section 80TTB: Senior Citizens can Save Tax on their Interest Income
- TDS threshold on Bank FD increased to Rs 40,000 from April 1, 2019
- Avoid TDS: fill Form 15G and 15H
- Small Bank FDs offer interest up to 9% – Should you invest?
- How SWP in Debt Funds generate higher returns than FD
- How to increase bank deposit insurance through Joint accounts?
- How Safe is Your Fixed Deposit in Bank?
- How you loose Money in Fixed Deposits?
- Fixed Deposits that you can use to save Tax
- Fixed Deposits for NRIs
- Highest Interest Rate on Recurring Deposits
- Understanding Compounding and Yield in Fixed Deposit
- How to get Credit card against Fixed Deposit?
- 7 High Rated Companies Offering more than Bank Fixed Deposits
- All about Post Office FD Schemes
Who should open Recurring Deposit Account?
Recurring Deposit suits people with regular income and who want to accumulate a fixed amount for certain time frame. An example could be if you want to buy car in next 2 years, you can easily open a RD account with any leading bank and start saving. If you deposit Rs 5,000 every month for 2 years at 7%, you would get about Rs 1,29,000 at maturity. This would be good for downpayment of the car.
It’s also for people who do not have lump sum amount to take advantage of high interest rates. An example is in March 2013 SBI was offering 9% interest rate on their recurring deposits for 10 years. I had opened a RD with Rs 5,000 just to lock a high interest rate for 10 years. On maturity I would get about Rs 9.7 lakhs – which is good accumulated amount. As of today SBI is offering 5.4%. So I have a good investment. It’s always good idea to lock when interest rate cycle reverses and it goes high.
Recurring Deposit or Fixed Deposit?
A question I am often asked is what is the difference between recurring deposit and fixed deposit. Both products have quite a similarity in terms of following:
- Both are offered by all banks
- the interest rates are similar or close
- the tax on interest earned is same for both RD & FD. Also TDS is applicable on both the cases.
In spite of all the similarities between FD & RD, they are meant for different kind of goals and suits different people and situations. In case you already have lump sum amount available go with FD as you start getting interest on entire investment from day 1. RD is more suited for regular savings and helps you accumulate a large amount over period of time.
Tax on Recurring Deposit Interest Rates
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% (started from June 2015) 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. The TDS is 20% in case the bank does not have your PAN number.
Additional Tax Exemption for Senior Citizens on Interest Income
Budget 2018 introduced a new section 80TTB, which gives additional tax exemption up to Rs 50,000 to Senior Citizens for interest income. Additionally, the threshold for TDS (Tax Deduction at Source) on interest income for Senior Citizens has been raised from Rs 10,000 to Rs 50.000 from FY 2018-19. In case your income is less than the income tax threshold you can avoid TDS by filling and submitting Form 15H to relevant banks and financial institutions.
Recurring Deposit Interest Rates FAQs
✅Which is the best recurring deposit scheme in India?
As of July 2020, DBS Bank offers 7.35% recurring deposit interest rate for 3 to 10 years tenure. Suryoday Small Finance Bank also offers 9% interest for its 5 year RD.
✅What is the top Recurring Deposit Interest Rates for 1 to 2 years in banks?
IDFC First bank offers 7.25% for its 1 – 2 year RD.
✅What is the top Recurring Deposit Interest Rates for 5 years in banks?
DBS bank offers 7.35% interest rate for it’s 5 years or more Recurring Deposit.
✅What is the maximum tenure of bank recurring deposits?
Most banks offer RD for 6 months to 10 years.
✅Are Bank Recurring Deposit safe?
Generally speaking bank FDs/RDs are safe as banks are rigorously monitored by RBI. The FD in Government owned banks like SBI, PNB are the safest. This is because government would intervene and pay the depositors. Next is big private banks like ICICI & HDFC followed by smaller private banks. After this we have small finance banks. Co-operative banks are worst of the lot and I would not trust them with my money. So until there are compelling circumstances keep away from co-operative banks. You can learn from recent example where Yes Bank was rescued by the government and no depositors suffered. However depositors of PMC Bank (a co-operative bank) are still suffering. You can learn more about this in our detailed article about How safe is your Bank Fixed Deposit?
✅How is interest on Recurring Deposit taxed?
The interest earned on recurring deposit is taxable as per your income tax slab. For senior citizens an additional exemption of Rs 50,000 under section 80TTB is available for interest income from banks/post office.
✅Can I get loan on my Recurring deposit?
Yes most banks offer loans up to 90% to 95% of recurring deposit balance.