A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount monthly for a chosen tenure, usually 6 months to 10 years. Recurring deposit interest rates range from 3% to 8.50% p.a. in 2025. RDs ensure guaranteed returns and are safer than market-linked options. Knowing what is recurring deposit allows you to save fixed amounts and build a secure corpus over time.
Key Highlights:
- Interest Rates: 3.00% – 8.50% p.a., compounded quarterly.
- Minimum Deposit: Starts from ₹100 (varies by bank).
- Tenure: Flexible from 6 months to 10 years.
- Premature Closure: Allowed with a penalty; partial withdrawal not permitted.
- Account Types: Regular, Senior Citizen, Minor, and NRE RD Accounts.
- Returns: Higher than savings account interest, lower risk than equity/mutual funds.
A Recurring Deposit (RD) is a type of term deposit where you invest a fixed sum every month instead of a lump sum, unlike Fixed Deposits. The amount earns interest at a fixed rate, compounded quarterly, and is paid out along with the principal at maturity.
Knowing what is recurring deposit is important, as it helps you build a disciplined saving habit, earn steady returns at fixed RD interest rates, and accumulate a financial corpus without market risk.
Although recurring deposit interest rates are generally similar across various banks, it is crucial to verify the specifics with your chosen institution. Here is a summary of the recurring deposit interest rates 2025 offered by major banks:
Bank RD | RD Interest Rates for General Public (per annum) | RD Interest Rates for Senior Citizens (per annum) |
3.50% to 7.30% | 4.00% to 7.80% | |
6.80% to 7.00% | 7.30% to 7.50% | |
3.00% to 7.30% | 3.50% to 7.80% | |
6.25% to 7.25% | 6.75% to 7.75% | |
6.00% to 7.40% | 6.50% to 7.90% | |
5.50% to 8.00% | 6.00% to 8.50% | |
3.85% to 7.10% | 4.35% to 7.60% | |
3.50% to 7.25% | 4.00% to 7.75% | |
4.75% to 7.25% | 5.25% to 7.80% | |
6.25% to 7.00% | 6.75% to 7.50% | |
4.50% to 7.20% | 5.00% to 7.75% | |
4.50% to 6.50% | 5.00% to 7.00% | |
4.25% to 7.15% | 4.75% to 7.65% | |
6.25% to 7.25% | 6.65% to 7.75% | |
5.75% to 7.25% | 6.25% to 7.75% | |
Karnataka Bank RD | 3.50% to 7.25% | 4.00% to 7.75% |
IndusInd Bank RD | 6.35% to 7.75% | 6.85% to 8.25% |
City Union Bank RD | 5.00% to 7.50% | 5.00% to 8.00% |
Bandhan Bank RD | 3.00% to 8.05% | 3.75% to 8.55% |
Yes Bank RD | 6.10% to 7.75% | 6.60% to 8.25% |
The interest accrued on a recurring deposit adheres to the principles of compounding. The formula used to calculate the maturity amount is as follows:
M = R[(1+i)^n-1]/(1-(1+i)^(-1/3)]
Where:
M = Maturity Value
R = Monthly Installment
n = Number of quarters
i = Rate of interest
For instance, if you invest Rs. 5,000 in a bank RD at an interest rate of 7.5% per annum for 60 months, the maturity amount would be calculated as follows:
M = 5000 [(1+0.075)^4-1]/(1-(1+0.075)^(-1/3)] = Rs. 62,478.46
Consider using the RD Calculator to get the estimated returns based on the tenure, recurring deposit interest rates, and monthly deposit amount. It helps you get accurate results in no time while also allowing you the flexibility to change the details and calculate until you are satisfied with the results.
There are two ways in which you can open a recurring deposit account with your preferred bank:
Online Application:
Step 1: Sign into your bank’s net banking or mobile banking account.
Step 2: Select the option of ‘Open an e-RD Account’ on your dashboard.
Step 3: Specify the account number for debit, preferred instalment amount, and investment period. Review the applicable RD interest rate and designate a nominee.
Step 4: Confirm acceptance of terms and conditions, ensuring to check the projected maturity amount.
Step 5: A confirmation message will appear, and a receipt will be sent to your registered email address. The specified amount will then be debited.
Offline Application:
Step 1: Visit the nearest bank branch where you hold a savings account.
Step 2: Complete the RD application form, including details such as instalment amount, payment mode, deposit duration, nominee information, and other necessary data.
Step 3: Make the first instalment payment via cheque or cash.
Step 4: The bank representative will process your application within a stipulated time frame.
To close your RD account after maturity and withdraw the amount, follow these steps:
Step 1: Take your RD account number, passbook, and ID proof to the bank branch where the RD account was opened.
Step 2: You will be provided with the RD account closing form, in which you will need to fill out with all the details.
Step 3: Submit the completed form along with proof of your ID for verification.
Step 4: The bank will process your RD withdrawal request and verify your details.
Step 5: The RD account will be closed, and the amount will be transferred to your linked savings account or current account.
Procedures may vary depending on the bank. Always check with your bank for specific details on closing an RD account and withdrawing the amount after maturity.
There are various types of Recurring Deposit (RD) accounts to suit different financial goals and individual requirements. Let us explore each of these types in detail:
Here are some essential features of recurring deposits:
To open an RD account in a bank, the following criteria apply:
To open an RD account at your preferred financial institution, you will need:
Investing in a recurring deposit account is a smart choice, as the principal amount invested is almost guaranteed to provide a return. The offered rate of return is also attractive, making the RD an intelligent investment option. Some other benefits of investing money in an RD account include:
If you wish to close an RD before maturity, the banks may charge a penalty ranging from 0.5% to 1% of the deposit amount. Some banks allow premature withdrawal, while some may not allow it. Thus, checking with the bank regarding the premature withdrawal rules and the penalty charged for it before opening an RD account is essential.
A recurring deposit is one of the simplest and safest savings options for individuals who want guaranteed returns without market risks. Recurring deposits encourage disciplined monthly savings, provide flexibility in tenure, and are available for minors, senior citizens, and NRIs alike. By understanding what is recurring deposit, its features, and the latest recurring deposit interest rates, you can make informed decisions.