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What is Recurring Deposit or RD – How to start investing in RD?

Are you a spendthrift but you need savings, but don’t have any ideas how to start with it? Recurring deposit RD yes, this can be the best way to start with more savings. As it not only helps in saving, but also gives you interest on your savings. Later it can also become a source of income also it’s very liberated in comparison to saving account. Lets understand in detail about what is RD? have a detailed look. What are its features and why is it beneficial? Let’s start:

What is a Recurring Deposit (RD)?

A recurring deposit is kind of similar to FD fixed deposit. These unique deposits are offered by all the Indian banks. One has to make regular deposits from their regular income. Every month you have to deposit a fixed sum of money into your recurring deposits account. 

It is an ideal way to create a savings account as one deposits a fixed sum for a fixed time period and also earns interest on it. The interest rate is almost similar to fixed deposit but may vary from bank to bank or according to different institutions. For the user flexibility there is a way to choose tenure, you can either choose 6 months RD or can also select the tenure for 10 years.

Now, Understand the benefits of RD

One can choose the amount they want to deposit in the RD account and you can also know the amount of interest charged on your deposits.

  • Good and fixed interest rates
  • No extra charges or late fee
  • Can start with small amount of 500 Rupees
  • Ease of access with online banking
  • No extra documentation
  • Available the facility in all banks
  • More savings
  • In most scenarios you can withdraw your Recurring Deposit before the maturing period.

These are few benefits which provides you the facility to start hassle free RD.

Also Read: What is Demand Draft?

How to open a Recurring Deposit account?

The process is accessible by both online and offline mode. Go to the official website of the bank, login with your internet banking and check for the option “Open RD”. Check if there are any terms and conditions because every bank follows different rules and you have to accept few T&C before start.

Fill in the form with the required information like your monthly deposit, tenure, date of deposit amount etc. Both saving and recurring deposit accounts are linked as the money will flow from the saving account. After selecting all the date, deposit amount the first amount will be debited on the same day and the next debit will be start from the next month.  

Documents needed: KYC will be done for which address, identity, birth proof etc, are needed.

The offline procedure is almost same,  just visit a bank and ask for opening an RD account. The bank will give you a form to fill your all the information and will open a RD account for you. They will handover a passbook of RD where you can track a record of every month investment. Hope there is no doubt left with how to open a RD account.

What is RD calculator?

 It calculates the matured( total) sum. However there are various on which it depends, some of them are:

Sum deposited: It refers to the lowest amount that can be transferred into the RD amount. The value varies from bank to bank, in some cases it can be even RS 20.

Interest accumulated: It depends on the bank also on the FD policy of the bank but major factors are the tenure and sum deposited

Tenure: The tenure also depends upon the bank’s policy however the maximum and minimum period is mentioned above.

Compound interest: Compound interest is used to calculate the matured amount depending on the monthly deposits.

Understand RD interest rates:

It is a very lucrative factor of this scheme. However it depends on a number of factors like the tenure, amount deposited and maturation level. 

The formula used to calculate compound interest is:



I= interest earned

P= principal amount

r = rate of interest

n= compounding frequency in a year

t= Years of investment

Let me give you an example, if your matured deposit is 50,000 at the interest rate of 5% for 5 years. If the compound interest is calculated in quarterly basis, than the interest earned in 5 years would be:



Total interest earned at maturation level would be 



Eligibility to start recurring deposit?

To hold an recurring deposits account one need to qualify certain criteria which might differ from bank to bank, but some common one are:

All grown ups are eligible but minors above 10 are only eligible. But minors need to have the guardianship  of their guardian or legal guardian.

RD can also be opened in the name of an institution like a company or commercial firm etc. Government organizations can also go for RD.

Final Thought…

RD is a perfect option for saving in a world that is becoming expensive day by day. It is much more beneficial than saving an account and you can also save for your future generation. So hurry up and open an RD


Ques 1. Is a bank account necessary for RD?

Ans. The answer depends on bank policy but in most of the cases one can have a RD but he needs to follow the KYC process.

Ques 2. What are the benefits of recurring deposit?

Ans. It has various benefits like you got to save that might turn into a source of income with so many liberation mentioned above.

Also Read: NFT- All About Non Fungible Tokens


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