Canara Bank offers many exciting options under their recurring deposit scheme which allows you to build your savings with monthly fixed deposits and earn interest on the deposited amount over a period of time.Continue reading to see what Canara bank’s recurring deposit options have in store for you!
Canara Bank RD Interest Rates for different Investment Periods
|Investment period||RD rates for regular deposit||RD rates for Senior Citizens|
|180 days to 269 days||7.00%||7.50%|
|270 days to 364 days||7.10%||7.60%|
|1 year 1 day to 1 year 364 days||7.25%||7.75%|
|2 years to 2 years 364 days||7.35%||7.85%|
|3 years to 4 years 364 days||7.35%||7.85%|
|5 years to 7 years 364 days||7.00%||7.50%|
|8 years to 10 years||7.00%||7.50%|
Canara Bank Recurring Deposit Interest Rates
- Upto 7.35% RD rates are offered with quarterly compounding.
- Minimum deposits accepted are as low as Rs 50
- 0.5% rate more than general public can be availed by senior citizens
Canara Bank Recurring Deposit: Special Features
- Nomination facility is available to any family member or spouse can be nominated to receive the final amount.
- There is no limit to the maximum amount that can be deposited.
- The deposit period ranges from 6 months to 120 months.
- The minimum amount that can be deposited is in multiples of Rs. 50
- TDS deductions will be as per existing income tax rules at the time of RD account opening.
- Loan facility upto 90% of deposit can be availed.
Canara Bank Recurring Deposit: Is it the best way to save?
Saving a specific amount of money every month can lead to a substantial amount for the emergency fund in the long term.Recurring deposit options can be availed to do so. However, they are not the best saving option if wealth creation is the objective. Let’s see you plan on saving for your retirement. A Recurring Deposit with 7% interest rate may not give you the returns needed to create a decent retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you create the kind of wealth you are aiming for.
The Benefits of Investing in SIPs
- A small amount of money that can be as low as Rs 500 has to be deposited by you every month or every quarter.
- On the basis of your budget and investment goal, your money will be invested in debt or equity funds. In the past decade, Equity Linked mutual funds have performed well in the market with a return of 12-22%. This will give significantly higher returns than recurring deposits.
- There is no penalty on money withdrawal from SIP account. This means that SIPs have higher liquidity when compared to recurring deposits that levy a penalty on premature withdrawal.
- Returns from SIPs which invest in Equity Linked Mutual Funds (ELSS) are tax exempt whereas the gains from an RD is taxable.
Canara Bank RD: Eligibility criteria
The following individuals and groups are eligible to open a Canara Bank recurring deposit account:
- Non-resident Indians can also open an RD account through NRO and NRE accounts
- Resident Individuals, Minors under parental guardianship, HUFs, Joint account holders
- Trust, company, sole proprietorship, firms associations etc.
Canara Bank: Premature withdrawal rules
Premature withdrawals can be made but they are subjected to a penalty of 1.00% rate.
Prematurely closed deposits will earn an interest 1% less than the initial applicable interest based on the recurring deposit scheme chosen.
Tax Benefits on Canara bank Recurring Deposit
All recurring deposits, including Canara bank recurring deposit, are taxable under the Income Tax Act 1961. The money that is invested in RD will be included in your yearly income and a TDS ( Tax Deducted at Source) of 10% is applicable on the interest earned ( If it is more than (if it is more than RS. 10,000 per year).To save TDS on your RD gains, you can fill either Form 15G or Form 15H.
Conditions for submitting Form 15G:
- You are an individual or HUF
- You must be a Resident Indian
- You should be less than 60 years old
- Tax calculated on your Total Income is nil
- The total interest income for the year is less than the minimum exemption limit for that year, which is Rs 2,50,000 for the financial year 2016-17
Documents Required to Open Canara bank RD Account
Proof of identity
- PAN card
- Voter ID card
- Driving License
- Government ID card
- Photo ration card
- Senior citizen ID card
- Telephone bill
- Electricity bill
- Bank statement with cheque
- Certificate /ID card issued by the post office.