Recurring deposit schemes are a wonderful way to build your savings over a period of time through regular monthly deposits. Not only do you save money but also earn interest on your deposits. Continue reading to see what Central Bank of India’s recurring deposit options has to offer.
Central Bank of India RD Interest Rates for different Investment Periods
|Investment period||RD rates for regular deposit||RD rates for Senior Citizens|
|180 days to 270 days||7.00%||7.50%|
|271 days to 364 days||7.00%||7.50%|
|1 year to 1 year 364 days||7.15%||7.65%|
|2 years to 2 years 364 days||7.10%||7.60%|
|3 years to 4 years 364 days||7.00%||7.50%|
|5 years to 10 years||7.00%||7.50%|
Central Bank of India Recurring Deposit Interest Rates
- RD rates offered are upto 7.15%with interest compounded quarterly
- Senior citizens can avail RD rates upto 7.65%
- Minimum accepted deposits start from Rs 100
Central Bank of India Recurring Deposit: Special Features
- Nomination facility is available to any family member or spouse can be nominated to receive the final amount
- Minors can open an account under parental guardianship.
- Loan facility upto 90% of the deposited amount can be availed.
- The deposit tenure ranges from 6 months to 120 months.
- The penalty levied on non-payment of the periodic deposit is Rs. 2.00 per month per Rs. 100 if deposit period is over 60 months and Rs. 1.50 per month per Rs. 100 in case deposit period is up to 60 months
- You can open your recurring deposit account in the nearest Central bank of India branch.
The central bank of India Recurring Deposit: Is it the best way to save?
Saving a specific amount of money every month can lead to a substantial amount as 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 substantial retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you achieve your financial goals.
The benefits of investing in SIPs
- A small amount of money that can be as low as Rs 500 can be deposited 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.
Central Bank of India: Eligibility Criteria
Recurring deposit accounts can be opened by :
- Joint account holders
- Sole proprietors, partnerships, and corporations
- Trust, societies clubs etc
Central Bank of India: Premature withdrawal rules
Central Bank of India allows account holders to prematurely withdraw money but a nominal amount of penalty might be levied on based on the scheme chosen. However, partial withdrawal of amount is not allowed.
Tax benefits on Central Bank of India RD
All recurring deposits, including Central Bank of India 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 Central Bank of India 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.