Recurring Deposits are very popularly known as RDs and they are a special kind of term deposits offered by Indian banks. People with consistent and regular income can every month deposit a fixed amount in the recurring deposit account and thereby earn a specific interest at the rate applicable to fixed deposits. Recurring deposits are very akin to making of Fixed Deposits by taking out a portion of your income and depositing it every month. This deposit matures on a specific date.
Recurring Deposits Scheme enables the customers to build a corpus of their savings by giving them an opportunity to make a regular monthly deposits of a fixed sum of money over a certain and fixed period of time. For Recurring Deposits the minimum period is 6 months whereas maximum period is 10 years.
Key Benefits of the Recurring Deposits Scheme
- It is very suitable for small investors and people with mediocre income. You need to make a small investment per month and you get interest rate that is equal to that of regular fixed deposits.
- Monthly Investments can be as small as Rs 1000/- per month to as large as Rs. 14, 99,900/- per Month.
Resident individuals, Hindu Undivided Families, Private & Public Limited Companies, Trust & Societies, etc can avail the benefits of recurring Deposits Scheme.
Fun Facts about Recurring Deposits
- The interest rate on these deposits is quarterly compounded at the rate of 8.4%.
- If you take a minimum of Rs 10/- and deposit it under this scheme, on the maturity you will get a total of Rs 746.53/- and it can be continued for the next five years.
- You can use cash or a cheque for opening an account. In the case of using cheque the date of presentation of cheque will be considered as the date of deposit.
- Availability of nomination facility at the time when you open your account and also after it.
- 5 You can transfer it from one post office to another and also you can open any number of accounts in any post office.
- You can even open an account in the name of a minor and a minor of 10 years and above can himself open and operate his own account.
- There is also a facility of opening a joint account.
- You can make deposits till 15th day of next month if you’ve opened your account up to 15th of the month and up to last working day in the case your account was opened between 16th day and last working day.
- If you fail to pay your deposits up to the prescribed day then a defaulter fee is charged for each default that you commit. The default fee is at the rate of 5 paisa for every rupee. And if there happens to be 4 regular defaults your account will be discontinued but it can be revived within 2 months but even after two months if you fail to do so then you can make no further deposits.
Recommended Read :
- What is Recurring Deposit?
- How Does Recurring Deposit Work?
- Guidelines and Minimum Amount to Open Recurring Deposit
- Millionare Fund Become a Millionare With Recurring Deposit
- Recurring Deposit a Good Regular Savings Habit in People
- Fixed Deposit Vs Recurring Deposit
- Why Banks Take Fixed Deposit?
- Best Alternatives to Fixed Deposits
- How to Avoid TDS on RD and FD?
- Tax Impact On Recurring Deposit Tax On Rd
- Premature Withdrawal of Recurring Deposit Closing Rd
- Loan On Recurring Deposit
- What is Term Deposit?