Recurring deposits (RDs) are one of the safest and most convenient avenues to grow your savings. This is a low-risk investment that allows monthly contributions for a specified duration, making it ideal for individuals looking to develop a regular savings habit. The capital deposited earns interest throughout the investment period. RDs are best suited for short to mid-term financial goals, such as buying a car, funding a vacation, or even building an emergency fund.
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When you open an RD account, you commit to making regular monthly deposits of a fixed amount for a pre-defined duration. The average tenure of an RD usually ranges from 6 months to 10 years but may vary for different banks. This is a fixed tenure, during which withdrawals may not be permitted. If a withdrawal is made, it may attract a penalty. The deposit amount, tenure, and interest rate for an RD investment are set when the account is opened.
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The interest rate on a recurring deposit is set by the bank and can vary based on the deposit’s tenure. It usually compounds every quarter or as per the bank’s policy. Once the investment reaches maturity, you receive the total amount which includes the principal i.e. the total of all your monthly deposits) and the interest that the deposit has earned during its tenure.
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If you are planning to start a recurring deposit to fulfil a short or medium-term goal, check out the interest rates which leading public sector banks are currently offering. Also given below is an illustration showing how much a recurring deposit investment of Rs.5000/month will yield in five year.
| Bank name | Interest (% pa) for Tenor = 5 Years | How Much RD Of Rs 5000 pm will Grow in 5 years?* |
| Bank of Baroda | 6.50 | ₹ 3,55,284 |
| Bank of Maharashtra | 5.75 | ₹ 3,48,279 |
| Canara Bank | 6.70 | ₹ 3,57,182 |
| Central Bank of India | 6.25 | ₹ 3,52,929 |
| Indian Bank | 6.25 | ₹ 3,52,929 |
| Indian Overseas Bank | 6.50 | ₹ 3,55,284 |
| Punjab National Bank | 6.50 | ₹ 3,55,284 |
| Punjab & Sind Bank | 6.00 | ₹ 3,50,594 |
| State Bank of India | 6.50 | ₹ 3,55,284 |
| UCO Bank | 6.20 | ₹ 3,52,461 |
| Union Bank | 6.70 | ₹ 3,57,182 |
Disclaimer: Interest rates on recurring deposits (RD) for all listed (BSE) public sector banks have been considered for data compilation. Data compiled by BankBazaar.com from respective banks’ websites as of Sep 29, 2023. Interest rate ((on RD for non-senior citizens) is considered for tenor= 5 years. Banks for which RD rates are not explicitly mentioned on their website are not considered. *Return is calculated with monthly compounding of interest. BankBazaar.com is India’s largest fintech co-brand credit card issuer.
