Recurring Deposit in india

Recurring Deposit (RD) is a type of investment option that is designed to help individuals save money on a regular basis and earn returns on their investment. It is a low-risk investment option that allows you to deposit a fixed amount of money every month for a predetermined period, ranging from a few months to several years. The interest rates on RDs are typically higher than regular savings accounts, making it an attractive option for those who want to grow their savings with minimal risk.

RDs can be opened easily online, and the application process is hassle-free. Once you have opened an RD account, you can choose the deposit amount and the duration of the investment. The interest rate is fixed at the time of opening the account, which means that you can calculate the returns you will receive on maturity.

One of the key advantages of RDs is that they provide a disciplined approach to saving. By depositing a fixed amount of money every month, you can build a habit of saving and ensure that you save a certain amount of money regularly. This can be particularly helpful if you have financial goals that you want to achieve in the future, such as saving for a down payment on a house, funding your child's education, or building an emergency fund.

RDs are also a good option for risk-averse investors who are looking for a safe and reliable way to invest their money. Unlike other investment options such as stocks and mutual funds, RDs do not carry any market risk, which means that your returns are guaranteed.

In conclusion, if you want to save money on a regular basis and earn guaranteed returns, then a Recurring Deposit could be an ideal investment option for you. With the flexibility and convenience of online account opening, you can start your RD investment journey today and watch your savings grow over time.

• Any minor above the age of ten is entitled to open a recurring deposit account if he or she produces proof of identity.
• Anyone can do it.
• Any corporation, firm, sole proprietorship, or commercial enterprise.
• Any government institution.
• Any minor under the guardianship of a natural or legal guardian who is under the age of ten.

• An application form
• KYC documents
• ID and Address proof
• Passport size photograph of the applicant

Here are some key features of Recurring Deposit:

• Regular Deposits: RD allows individuals to make regular monthly deposits of a fixed amount.
• Fixed Tenure: The deposit period is fixed at the time of opening the account, and typically ranges from 6 months to 10 years.
• Attractive Interest Rates: The interest rates on RDs are generally higher than regular savings accounts and are fixed for the entire tenure of the deposit.
• Low Risk: RDs are considered a low-risk investment option, as they do not carry market risk and offer guaranteed returns.
• Flexible Deposit Amount: The deposit amount for RDs is usually flexible and can be chosen by the investor at the time of opening the account.
• Penalty on Premature Withdrawal: If you withdraw your investment before the maturity date, you may be subject to a penalty fee.
• Nomination Facility: RD accounts provide a nomination facility, allowing investors to nominate a person who will receive the deposit amount in case of the account holder's demise.
• Easy Account Opening: RD accounts can be easily opened online, without the need to visit a bank branch.
• Loan Facility: RDs can be used as collateral for taking loans from the bank, providing individuals with an additional source of finance.
• Tax Implications: The interest earned on RDs is taxable, and TDS (Tax Deducted at Source) may be applicable if the interest earned exceeds a certain threshold.

There are two main types of Recurring Deposits, namely Regular Recurring Deposit and Flexi Recurring Deposit.

Regular Recurring Deposit:

In a Regular Recurring Deposit, the investor needs to deposit a fixed amount every month for a specific tenure. The interest rate is fixed for the entire deposit tenure, and the investor receives a lump sum at maturity that includes both the principal and interest. Regular RDs are a good option for those who want to cultivate a habit of saving and earn guaranteed returns.

Flexi Recurring Deposit:

A Flexi Recurring Deposit is a more flexible investment option compared to the regular RD. It allows investors to make variable deposits, unlike the fixed deposits in a regular RD. In a Flexi RD, investors can choose to deposit any amount, at any time, and can even skip a month if needed. The interest rate is calculated on the balance outstanding on a daily or monthly basis. The Flexi RD is an ideal option for those who have variable income or want the flexibility to deposit a varying amount every month.

Both types of Recurring Deposits have their unique advantages and disadvantages, and investors can choose the type that suits their financial goals and investment needs. While a Regular RD offers a disciplined approach to saving and provides guaranteed returns, a Flexi RD offers more flexibility in terms of deposit amount and frequency. Ultimately, the choice between the two types of RDs will depend on the investor's financial goals and investment preferences.

Now that we've covered the basics of what RD is, let's examine the factors that should be taken into account before investing in this scheme. Here are some of the factors you should consider before opening an RD account: -

Investment Amount

When it comes to opening a recurring deposit account, the minimum investment amount required is only Rs. 100. This makes it a convenient investment scheme that doesn't require a lot of funds to get started. However, it's important to determine your investment amount before opening an RD account.

Tenure

The tenure of a recurring deposit typically ranges between 6 months and 10 years. It's worth noting that once you've opened an RD account, you won't be able to change the tenure until it reaches maturity. Therefore, it's important to carefully choose a tenure that suits your investment requirements and can help you earn maximum returns.

Interest Rates

With a recurring deposit, you earn interest on your investment every month. It's important to note that interest rates may vary between different banks, so it's recommended to choose a recurring deposit scheme that offers the highest interest rates to maximize your returns.

Taxation on Interest

Recurring Deposit is commonly abbreviated as RD, and it's important to note that the interests earned on them are taxable. However, it's worth noting that the minimum taxable earned interest is Rs. 40,000. In other words, if the interest earned on RD is less than Rs. 40,000 (or Rs. 50,000 for senior citizens), the bank won't deduct any tax. Additionally, if you submit a 15G/15H Form to the bank indicating that your income falls below the tax limit, the bank won't deduct any tax.

Withdrawals

It's worth considering that partial withdrawals aren't permitted with a recurring deposit. However, premature withdrawals are possible with some penalties being charged.