Types of Recurring Deposits (RD) in India

Recurring Deposits (RD) is one of the fine means of saving and investment options that are popular in India. This type of time deposit account offers a systematic way to save and earn interest among senior citizens, freelancers, businessmen, seasonal income generators and entrepreneurs too.

Let’s take an in-depth look at the various types of Recurring Deposits available, their benefits, interest rates, and with it more. Compare RD plans from top banks and choose the best one from different types of recurring deposits for you today.

Recurring Deposit (RD) Details

In the interest of investors, recurring deposits upon maturity, yields a good interest on the lumpsum you have deposited. You can open an account in any of the nationalised banks, NBFCs, PSUs and other financial institutions where you can earn interest over a specified tenure. It encourages disciplined saving habits and offers assured returns as a low risk investment option.

Types of Recurring Deposits Accounts Outlook

The RDs in India are listed below with information on its, advantage, tenure, nature of savings and overall perspective on the type of RD.

Regular Recurring Deposit

The standard RD where customers deposit a fixed amount every month for a predetermined period, ranging from 6 months to 10 years. Suitable for individuals looking for a disciplined savings plan with assured returns.

Flexi Recurring Deposit

A flexible RD where depositors can vary their monthly deposit amounts, making it ideal for those with fluctuating incomes. Interest is calculated on the total amount deposited, providing more flexibility than regular RDs.

Senior Citizen Recurring Deposit

Special RDs designed for senior citizens, offering higher interest rates than regular RDs. These accounts often come with additional benefits like higher loan limits and special schemes designed for senior citizens.

NRE/NRI Recurring Deposit

These RDs are meant for Non-Resident Indians (NRIs). NRE RDs allow NRIs to deposit their foreign earnings in Indian banks, while NRI RDs facilitate managing income earned in India. Both offer attractive interest rates and the benefits of RDs.

Tax saving Recurring Deposit

A Tax Saving Recurring Deposit (RD) is a type of RD that provides tax benefits under Section 80C of the Income Tax Act, 1961. It is designed to encourage individuals to save regularly while also allowing them to reduce their taxable income by investing in a tax-saving instrument.

Eligibility Criteria to Open a RD Account

To open a Recurring Deposit account, you must:

• Be an Indian resident or an NRI (for NRE/NRI RDs)
• Have a savings account with the bank
• Meet the minimum age requirement set by the bank (usually 18 years)

Flexi Recurring Deposits Schemes

Flexi RDs are a great choice for those who prefer low-risk investments but want more freedom in managing how much they save each month. This is helpful for freelancers and contractors with unstable incomes, as well as small business owners who may have varying cash flow.

Key Features of Flexi Recurring Deposits

1. Variable Monthly Deposits:
   • Depositors can choose to deposit different amounts each month. This feature is particularly beneficial for individuals with irregular income streams, such as freelancers or those in seasonal businesses.
2. Interest Calculation:
   • Interest is calculated based on the total amount deposited over the tenure. The interest rate may be the same as regular RDs or slightly different, depending on the bank’s policy.
3. Flexibility in Deposits:
   • Unlike regular RDs, where missing a deposit could result in penalties, Flexi RDs usually offer more leniency. Depositors can choose to skip deposits or deposit varying amounts without incurring penalties.
4. Tenure Options:
   • Flexi RDs also offer a range of tenures, similar to regular RDs, typically from 6 months to 10 years. This allows depositors to align their savings plan with their financial goals.
5. Loan Facility:
   • Just like regular RDs, Flexi RDs often come with the option to avail loans against the deposit amount. This feature provides liquidity without the need to prematurely close the RD.
6. Minimum and Maximum Limits:
   • Banks may set minimum and maximum deposit limits for Flexi RDs. For instance, there might be a minimum amount that must be deposited each month and a maximum limit to ensure compliance with the scheme’s rules.

Check out more on recurring deposits through the links provided below:

Benefits of Recurring Deposits

Recurring deposits in India offer a range of benefits with guaranteed returns, flexible tenure options, low risk, loan facility, and ease of opening make RDs a popular choice among a wide array of investors. Whether for short-term goals or long-term financial planning, RDs provide a secure and reliable way to grow savings, systematically.

Guaranteed Returns

Recurring deposits come with a fixed interest rate that is determined at the time of opening the RD account. This interest rate remains constant throughout the tenure of the deposit.

– Benefactors: Individuals looking for assured returns without the uncertainty of market fluctuations.

Flexible Tenure

RD accounts offer a range of tenures, typically from 6 months to 10 years. Depositors can choose a tenure that aligns with their financial goals and saving capabilities.

– Benefactors: Those with specific financial targets, such as saving for education, marriage, or a down payment on a house.

Low Risk

Recurring deposits are considered one of the safest investment options as they are not affected by market volatility. The principal amount and the interest earned are both secure.

– Benefactors: Risk-averse investors who prefer security over higher returns . Suitable for retirees, conservative savers, and individuals planning for future financial stability.

Loan Facility

Many banks offer loan facilities against the amount accumulated in an RD account. Typically, up to 90% of the RD amount can be availed as a loan, making it a useful feature in times of financial need.

– Benefactors: Individuals who might need quick access to funds without breaking their RD

Easy to Open

Opening an RD account involves a simple and straightforward process. Most banks allow opening RD accounts online or through their branches with minimal documentation.

– Benefactors: Suitable for all individuals, including those who may not be tech-savvy or financially knowledgeable.

Besides Types of Recurring Deposit You can also check Bank wise given below