Bank & Post Office Product
Recurring Deposit (RD)
Save a fixed amount every month and watch it grow — predictable returns, low market risk, and flexible tenures from 6 months to 10 years.
Monthly Savings
Fixed monthly deposits — no lump sum needed.
Predictable Returns
Rate locked in at opening; maturity value known upfront.
Flexible Tenure
6 months to 10 years depending on the bank.
Low Market Risk
Returns not linked to stock market movements.
Senior Benefits
Many banks offer higher rates for senior citizens.
Overview
What is a Recurring Deposit?
A Recurring Deposit (RD) lets you deposit a fixed amount every month for a chosen tenure. Unlike a Fixed Deposit, there is no lump-sum upfront. At maturity you receive all your deposits plus the accumulated interest — making it ideal for building savings gradually with predictable, market-independent returns.
Good for goals like…
Eligibility
Who Can Open an RD?
- Resident individuals
- Joint account holders (subject to institution rules)
- Minors via parent or guardian, or independently where permitted
- Senior citizens — may get preferential interest rates
- NRI customers — check bank-specific eligibility and regulations
KYC
Documents Required
- Identity proof — Aadhaar, PAN, Passport, Voter ID, Driving Licence
- Address proof — Aadhaar, Passport, utility bills, bank statement
- PAN card or Form 60 (where applicable)
- Photograph if required by the institution
- RD account opening form or digital application
Where to Open
Banks, Post Offices & Online
- Public sector and private sector banks
- Scheduled banks offering RD facilities
- Cooperative banks (subject to their products)
- India Post — Post Office RD scheme (5-year standard tenure)
- Online via internet banking or mobile banking
Most banks let you open and manage an RD entirely through internet or mobile banking. Existing customers can often use their existing KYC — no branch visit needed.
Returns & Tax
Interest Rates & Tax Treatment
How rates work
Rates vary by bank, tenure, and customer type. ICICI Bank's published RD rates currently range from 4.50% to 6.50% p.a. for general customers, with higher rates for eligible senior citizens. Always confirm the rate on the day you open the account — rates may change for new deposits.
Tax treatment
Interest earned on an RD is fully taxable as per your income tax slab. TDS may be deducted at source based on prevailing thresholds. No Section 80C benefit applies to regular bank RDs (Post Office RDs differ — check applicable rules).
Important Terms
Penalties & Premature Closure
Late / missed installments
Banks charge a penalty for delayed or missed monthly deposits. For example, ICICI Bank charges ₹12 per ₹1,000 per month for late installments. Penalty structures differ across banks — check before opening.
Premature closure
Generally allowed, but you'll typically receive a lower interest rate than the original contracted rate, plus a premature withdrawal penalty. Exact terms vary by bank and original tenure.
Deposit Safety
DICGC Deposit Insurance
Deposits with eligible insured banks may be covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC) framework — but coverage is subject to limits, conditions, and aggregation rules across all deposits in the same bank. Do not assume the entire amount is automatically insured. Post Office RDs are backed by the Government of India and operate outside the DICGC framework.
Things to Know
Before You Open an RD
- Compare rates across banks — they vary by tenure and customer type
- Missed installments attract penalties (e.g. ₹12 per ₹1,000/month at ICICI Bank)
- Premature closure reduces interest and may attract withdrawal penalties
- Interest is fully taxable; TDS applies per prevailing Income Tax rules
- Deposit insurance (DICGC) covers eligible banks subject to limits — not unlimited
- Rates may change for new deposits; confirm on the actual date of opening
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