RD Interest Rates 2024

RDs are a popular investment option in India, offering a disciplined approach to savings and helping individuals achieve their financial goals. It is a type of term deposit offered by banks and financial institutions. It allows you to save a fixed amount of money at regular intervals, usually monthly, for a specific period, and earn interest on your savings.

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Let us learn about the Recurring Deposit (RD) in greater detail. 

What is RD – Recurring Deposit?

RDs are a popular and reliable savings instrument offered by banks and financial institutions, allowing investors to systematically save a fixed amount at regular intervals for a specified period. It is an excellent choice for those looking for a disciplined approach to savings, providing attractive returns while minimizing risk.

It is a popular savings option for individuals who want to accumulate a certain amount of money over time by making regular contributions.

Eligibility Criteria

The eligibility criteria for opening an RD in a bank or Post Office is identical to other term deposits. 

The following are eligible to open the account: 

  • Individual savings account holder

  • Minors above 10 years of age

  • Minor below or equal to 10 years of age under natural or legal guardianship

  • A corporate, company, proprietorship, or commercial organization

  • A government organization

Features of RD Account

You earn a fixed interest in the RD account applied at a fixed frequency to mature at the end of the selected tenor’s end. Thus, RD interest is compounded quarterly in most banks. Your maturity value is paid as the account terminates on maturity. 

Let us check out the critical features.

  • The scheme teaches savings habits to the public.

  • You can open an RD account for a minimum of Rs.100 to benefit small and marginal investors. 

  • The RD tenor is from a minimum of six months to a maximum of ten years.

  • The RD interest rates are the same as fixed deposits, higher than any other savings scheme.

  • You can close your RD account prematurely without any penalty being levied.

  • You can avail of a loan against the RD account as collateral for up to 75% of the accumulated balance. However, this may vary across banks.

  • You can pay the monthly instalment in cash, transfer, or through a registered one-time standing instruction to transfer the monthly deposit from your savings or current account. 

RD Interest Rates in Banks

The RD interest rates are similar in most banks. However, you must check out with your bank for the specifics. 

Bank  RD Interest Rates for General Public  RD Interest Rates for Senior Citizens 
Yes Bank RD Interest Rates  4.75% to 6.25%  5.25% to 7.00%
Union Bank RD Interest Rates  4.40% to 5.50%  4.40% to 5.50%
TMB RD Interest Rates  5.25% to 6.50%  5.25% to 7.00%
South Indian Bank RD Interest Rates  3.65% to 7.00%  4.15% to 7.50%
SBI RD Interest Rates  5.40% to 7.00%  6.20% to 6.50%
Saraswat Bank RD Interest Rates  3.25% to 7.00%  3.75% to 7.50%
PNB RD Interest Rates  3.50% to 6.50%  4.00% to 7.30%
Post Office RD Rate  6.2%  6.2% 
Kotak Mahindra Bank RD Interest Rates  6.00% to 6.20%  6.50% to 6.70%
Karur Vysya Bank RD Interest Rates  4.06% to 6.03% NA 
Karnataka Bank RD Interest Rates  4.50% to 5.80%  4.90% to 6.20%
Jammu and Kashmir Bank RD Interest Rates  3.50% to 6.50%  4.00% to 7.00%
IndusInd Bank RD Interest Rates  3.50% to 7.25%  4.00% to 7.75%
Indian Overseas Bank RD Interest Rates  4.65% to 5.85%  5.15% to 6.35%
Indian Bank RD Interest Rates  2.80% to 6.10%  3.30% to 6.60%
IDBI Bank RD Interest Rates  3.00% to 4.80%  3.50% to 4.80%
ICICI RD Interest Rates  4.75% to 7.00%  5.25% to 7.00%
HDFC RD Interest Rates  4.50% to 7.00%  5.00% to 7.75%
Federal Bank RD Interest Rates  3.00% to 6.60%  3.50% to 7.25%
Dhanalakshmi Bank RD Interest Rates  6.50% to 7.00%  7.00% to 7.50%
DBS Bank RD Interest Rates  3.00% to 6.50%  3.00% to 7.00%
City Union Bank RD Interest Rates  5.00% to 6.25%  3.50% to 7.75%
Citibank RD Interest Rates  3.50% to 7.00%  3.50% to 7.75%
Canara Bank RD Interest Rates  2.90% to 4.00%  3.4% to 4.50%
Bank of Maharashtra RD Interest Rates  2.75% to 5.75%  3.25% to 6.25%
Bank of India RD Interest Rates  4.35% to 5.75%  4.85% to 6.25%
Bank of Baroda - BOB RD Interest Rates  4.65% to 5.50%  5.15% to 6.50%
Bandhan Bank RD Interest Rates  3.00% to 6.50%  5.25% to 6.35%
Axis Bank RD Interest Rates  3.50% to 7.00%  3.50% to 7.75%

RD Interest Rates Calculation

RD interest rates are calculated considering several factors in RD calculator. The typical compounding frequency in banks is quarterly. 

Maturity Value

M = R [ (1+i) n – 1 ] / 1 – (1–i) -⅓

  • The variables used in the above formula are:
    M = Maturity value
    R = Monthly Installment
    n = Number of quarters
    I = Interest Rate 

RD Interest Rates for Premature Withdrawal

  • Interest rates for premature withdrawal from an RD account may vary depending on the bank or financial institution's policy and the tenure for which the RD has been held.

  • Banks typically have a predetermined penalty or reduction in interest rates for premature withdrawals, which can range from 0.5% to 1% lower than the regular RD interest rate.

  • For example, if the regular RD interest rate is 7% per annum, the interest rate for premature withdrawal may be reduced to 6% or 6.5% per annum.

  • This reduction in interest rate results in a lower interest earned on the RD amount for premature withdrawals.

  • The exact penalty or reduction in interest rate for premature withdrawal may differ from bank to bank, and it's important to check with the specific bank or financial institution's policy before making any premature withdrawals from an RD account.

Types of RD Interest Rates

In India, several types of Recurring Deposit (RD) interest rates are offered by banks and financial institutions. These include:

  • Special Recurring Deposit Schemes: Some banks and financial institutions offer special RD schemes with unique features and benefits. These may include higher interest rates, flexible tenures, or additional benefits such as free insurance coverage or loan facilities.

  • NRE/NRO Recurring Deposit Schemes: Non-Resident External (NRE) and Non-Resident Ordinary (NRO) RD schemes are designed for Indians residing abroad or Indians with NRI status. These RD schemes allow NRIs to deposit their earnings in foreign currency or Indian rupees, respectively, and earn interest on their deposits.

  • RD Schemes for Senior Citizens: Many banks offer RD schemes specifically designed for senior citizens, typically aged 60 years and above. These schemes often offer higher interest rates compared to regular RD schemes, providing additional benefits for senior citizens.

  • RD Schemes for Minors: Some banks offer RD schemes for minors, which can be opened by parents or guardians on behalf of their children. These RD schemes typically have lower minimum deposit requirements and may offer special features such as flexible tenures or preferential interest rates.

  • Regular RD Savings Scheme: This is the most common type of RD scheme offered by banks and financial institutions in India. It allows individuals to deposit a fixed amount of money at regular intervals, usually monthly, for a predetermined period, and earn interest on their deposits.

Tax Exemption of RD 

  • Recurring deposit programs and other personal tax-saving and investment tools are subject to taxation.

  • If the total interest earned from a recurring deposit exceeds Rs. 10,000 in a single fiscal year, a TDS (Tax Deducted at Source) of 10% is deducted.

Partial Withdrawal of RD

Partial withdrawal is not permitted in the case of a Recurring Deposit (RD), although some banks may offer a loan or overdraft facility by using the RD deposit as collateral. 

Post office RD accounts allow premature withdrawal after one year wherein the withdrawn amount is treated as a loan.

In Conclusion

RD account is a term deposit popular among small investors due to its structure where you invest in monthly installments, unlike lump sum investment. You can start from an amount as low as Rs.100 to warn RD interest rates applied to term deposits and higher than a regular savings account. Moreover, you enjoy all the fixed deposit benefits other than renewal as your RD account terminates on maturity.

FAQ's

  • Q. What is a Flexi RD account?

    A. It is an RD account where you can pay the monthly instalment higher than what is contracted but continue until maturity. You can also skip an instalment without penalties, but every bank does not extend the facility. 
  • Q. Is TDS applicable to interest earned on your RD account?

    A. Yes, the bank applies 10% TDS on the interest earned in your RD account if it exceeds Rs.40000 in a financial year and you have registered your PAN card with them. Senior citizens are exempted from TDS up to Rs.50000 interest earned in a financial year. 
  • Q. Is there a provision for adding a nominee to the RD account?

    A. Yes, you can add a nominee to your RD account while opening it or later by putting a request in the prescribed format. 
  • Q. What happens if you miss an instalment and deposit the defaulted amount later?

    A. The instalment is accepted, but you lose notionally in the interest compounding benefit reflected in the marginally lower maturity value.

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