The best interest rates on recurring deposits (RDs) are offered by small finance banks, niche lenders which lend to the under-banked of the society.
Recurring deposits or RDs allow you to save money regularly and build your savings upon your deposits. For risk-averse investors – who are unwilling to take any risks on their investment – recurring deposits are a perfect bet. Recurring deposits allow them to accumulate funds without risks and worries of market-linked fluctuations. Recurring deposit interest rates, once determined, do not change during the tenure. In fact, the Reserve Bank of India ensures that strict guidelines are followed by banks. On maturity, the depositor is paid a lump sum amount which includes his periodic investments and the interest income earned on them.
Leading banks like State Bank of India (SBI), HDFC Bank and ICICI Bank offer the facility of opening a recurring deposit account. Even post offices offer the facility of recurring deposits. But the best interest rates on recurring deposits are offered by small finance banks, niche lenders which lend to the under-banked of the society but can also be used by mainstream depositors. Their interest rates on savings, fixed and recurring deposits are usually higher than their larger peers as well as post offices.
Given below is a comparison of recurring deposit (RD) interest rates of AU Small Finance Bank, Suryoday Bank and post offices:
Recurring deposit (RD) interest rates of AU Small Finance Bank
The amount on the instalment of your recurring deposit account, once fixed, cannot be altered at any later date, said AU Small Finance Bank. If more than one instalment is overdue at the time of instalment, the paid instalment, if sufficient will cover only that one instalment, it said on its website aubank.in. This instalment will be appropriated towards the first or the earliest instalment overdue.
Partial payment of RD instalments is not permitted. For premature withdrawals, AU Small Finance Bank levies a penalty of 1 per cent on the applicable rate.
|TENURE BUCKETS||Interest Rate p.a. (%)|
|For Domestic/NRO||For Senior Citizens*|
|37 Months to 45 Months||7.30%||7.80%|
|46 Months to 60 Months||8.00%||8.50%|
|61 Months to 120 months||7.25%||7.75%|
Recurring deposit (RD) interest rates of Suryoday Bank
The maximum amount of monthly instalment of a recurring deposit account is capped at Rs. 14,99,900, said Suryoday Bank. Recurring deposit accounts can be maintained for a minimum tenure of six months and in multiples of three months thereafter subject to a maximum of 10 years, it said on its website suryodaybank.com. The minimum instalment amount for an RD is Rs. 100 (and multiples of Rs. 100 thereof).
|Interest Rates||Domestic Deposits (Effective: From September 21, 2017)|
|Period||Interest Rate||Senior Citizen Rate#|
|(Per Annum)||(Per Annum)|
|Above 3 years to 5 years||7.75%||8.00%|
|Above 5 years to 10 years||7.25%||7.50%|
Recurring deposit (RD) interest rates of post offices
You can open a recurring deposit account in any post office of the country with a minimum amount of Rs. 10 per month or any amount in multiples of Rs. 5, said India Post. There is no maximum limit on the investment, according to indiapost.gov.in. The recurring deposit account can be opened by cash / cheque and can be transferred from one post office to another.
Post offices offer an interest rate of 6.9 per cent per annum (quarterly compounded) on recurring deposits. This has been the interest rate on recurring deposits since 1.01.2018. On maturity, a deposit of Rs. 10 in recurring deposit account fetches Rs. 717.43. The RD can be continued for another five years on year-to-year basis.