Recurring Deposit (RD) in India
Complete Guide, Rates & Calculator (2026)
Compare RD interest rates from all major banks, calculate your maturity amount instantly, and learn everything you need to make a smart monthly savings decision.
What is a Recurring Deposit (RD)? A Recurring Deposit is a savings scheme offered by banks and post offices in India where you deposit a fixed amount every month for a chosen tenure and earn guaranteed interest. At the end of the tenure, you receive the total deposited amount plus interest — all risk-free and backed by the institution.
🔑 Key Takeaways
📋 Table of Contents
- What is a Recurring Deposit?
- How Does RD Work?
- RD Calculator
- RD Interest Rates 2026
- Benefits of RD
- Features of RD
- Who Should Invest in RD?
- Types of RD Accounts
- Post Office RD Scheme
- RD vs Fixed Deposit
- RD vs SIP
- Taxation of RD Interest
- Premature Withdrawal
- Loan Against RD
- Documents Required
- How to Open RD Online
- Common Mistakes to Avoid
- Best RD Accounts in India
- Frequently Asked Questions
What is a Recurring Deposit?
A time-tested, government-backed savings instrument for disciplined monthly investing.
A Recurring Deposit (RD) is a deposit scheme offered by banks and post offices across India that lets you invest a fixed sum of money every month for a predetermined period. Unlike a Fixed Deposit where you invest a lump sum, an RD is designed around monthly contributions — making it perfect for people with regular income who want to build a corpus over time.
At maturity, you receive your total deposited principal plus the accumulated compound interest — completely risk-free. The interest is usually compounded quarterly, and the rate is locked in at the time of opening the account, meaning it doesn't fluctuate even if market interest rates change.
Fixed Monthly Commitment
You commit to a specific monthly amount — anywhere from ₹100 to any limit — for the chosen tenure.
Locked-In Interest Rate
The rate is fixed when you open the account and doesn't change throughout the tenure.
Bank & Post Office Backed
Deposits up to ₹5 lakh are insured by DICGC, making RDs one of India's safest investment options.
How Does an RD Work?
A visual walkthrough from first deposit to maturity payout.
Open Account
Choose bank, tenure & monthly amount
Monthly Deposits
Auto-debit on same date each month
Quarterly Compounding
Interest compounds every quarter
Maturity Payout
Principal + interest credited to your account
The RD interest is calculated using the formula: M = R × [(1 + i)ⁿ – 1] / (1 – (1 + i)^(-1/3)) where M is the maturity amount, R is the monthly installment, i is the quarterly interest rate, and n is the total number of quarters. Most banks compound interest on a quarterly basis.
RD Calculator
Instantly calculate your maturity amount, total investment, and interest earned.
🧮 Recurring Deposit Calculator
Adjust the sliders below to see your projected returns in real time.
Interest %
15%Latest RD Interest Rates in India (May 2026)
Updated monthly. Always verify current rates on the official bank website before investing.
| Bank | General Citizen (p.a.) | Senior Citizen (p.a.) | Min. Deposit | Tenure |
|---|---|---|---|---|
SBI State Bank of India |
6.50% | 7.00% | ₹100 | 1–10 Yrs |
HDFC HDFC Bank |
6.50% | 7.00% | ₹1,000 | 6M–10 Yrs |
ICICI ICICI Bank |
6.70% | 7.20% | ₹500 | 6M–10 Yrs |
Axis Axis Bank |
6.80% | 7.30% | ₹500 | 6M–10 Yrs |
PNB Punjab National Bank |
6.50% | 7.00% | ₹100 | 1–10 Yrs |
BOB Bank of Baroda |
6.35% | 6.85% | ₹100 | 1–10 Yrs |
Canara Canara Bank |
6.40% | 6.90% | ₹500 | 6M–10 Yrs |
Union Union Bank of India |
6.40% | 6.90% | ₹100 | 1–10 Yrs |
PO RD Post Office RD |
6.70% | 6.70% | ₹100 | 5 Yrs only |
*Rates are indicative for popular 1–3 year tenures. Rates vary by tenure. Always verify on official bank websites before investing.
Benefits of a Recurring Deposit
Why millions of Indians choose RD as their preferred savings tool.
Guaranteed Returns
Unlike mutual funds or stocks, RD returns are completely fixed and guaranteed. Your money is safe regardless of market conditions.
Disciplined Savings Habit
Monthly auto-debit ensures you save consistently without relying on willpower. Perfect for building long-term financial discipline.
Start Small
You can start with as little as ₹100 per month at post offices and many banks. No large lump sum required.
Goal-Based Saving
Ideal for specific goals — a vacation, gadget purchase, emergency fund, children's education fees, or a home down payment.
DICGC Insurance
Bank RDs are covered by Deposit Insurance up to ₹5 lakh per bank. Government-backed security at its best.
Easy Online Management
Open, track, and close your RD entirely through internet banking or your bank's mobile app — no branch visit needed.
Features of RD Accounts
Who Should Invest in RD?
RDs are tailor-made for a wide range of investors looking for safety and consistency.
RD is not ideal for investors seeking high returns or wealth creation over the long term. If you have a higher risk appetite and a longer horizon, consider SIP in equity mutual funds alongside your RD allocation.
Types of RD Accounts
Bank RD
Offered by all commercial banks. Most flexible in terms of tenure, amount, and digital access. Rates vary by bank and tenure.
Post Office RD
5-year RD backed by the Government of India. Currently offers 6.70% p.a. — suitable for those in remote areas or without bank access.
Senior Citizen RD
Specially higher rates for individuals aged 60 and above. Most banks offer 0.25%–0.50% additional interest over regular rates.
NRE / NRO RD
Available for Non-Resident Indians. NRE RD interest is tax-free in India. NRO RD interest is taxable in India.
Post Office RD Scheme
The Post Office Recurring Deposit is a 5-year small savings scheme run by India Post under the Ministry of Finance. It carries the sovereign guarantee of the Government of India — making it one of the safest investment options available.
Current Interest Rate
6.70% p.a. (compounded quarterly). Revised by the government each quarter.
Minimum Deposit
₹100/month (multiples of ₹10 thereafter). No upper limit on investment.
Fixed Tenure
Only 5 years. Can be extended for another 5 years after maturity.
- Premature closure allowed after 3 years (with lower interest applicable)
- Loan against Post Office RD available after 12 months (up to 50% of balance)
- Account transferable between post offices across India
- Can be opened in the name of a minor (operated by guardian)
- Tax benefit: No TDS deducted at source (but interest is taxable per slab)
RD vs Fixed Deposit (FD)
Both are safe, guaranteed-return instruments. The right choice depends on your cash flow.
RD vs SIP
The most searched comparison — which monthly savings option is right for you?
Taxation of RD Interest in India
RD interest is not tax-free. Here's exactly how it works for FY 2026–27.
📋 Taxable Income Head
RD interest is taxed under "Income from Other Sources" — added to your total income and taxed at your applicable slab rate.
✂️ TDS Threshold (FY 2026–27)
TDS @ 10% is deducted if your total interest from a bank exceeds ₹40,000/year (₹50,000 for senior citizens).
📄 Form 15G / 15H
Submit Form 15G (below 60 yrs) or Form 15H (senior citizen) to your bank if your total income is below the taxable limit to avoid TDS.
Tax-Saving Tips for RD Investors
- Submit Form 15G/15H at the beginning of the financial year to avoid TDS if eligible
- Declare RD interest in your ITR even if TDS was not deducted — it is always taxable
- Consider splitting RD accounts across family members in lower tax brackets
- If you want tax-free returns, consider PPF, NPS, or ELSS instead of RD
- NRE RD accounts offer tax-free interest for Non-Resident Indians
Premature Withdrawal of RD
What happens if you need to close your RD before it matures?
Interest Penalty
Most banks apply a penalty of 0.50%–1.00% below the applicable rate for the period the deposit was held. You still earn interest, just less than the original rate.
Minimum Lock-in
ICICI Bank, for instance, pays no interest on RDs closed within 7 days of opening. Most banks require a minimum holding period for any interest to apply.
Post Office Rules
Post Office RD allows premature closure only after 3 years. If closed between 1–3 years, Post Office Savings Account interest rate applies.
Before breaking your RD, compare the penalty cost against alternatives like taking a loan against RD (which is cheaper and doesn't break the deposit).
Loan Against RD
Need funds urgently? Don't break your RD — take a loan against it instead.
Most banks offer a loan or overdraft facility against your Recurring Deposit. This lets you access funds without losing out on your RD interest or incurring premature withdrawal penalties.
- Loan amount: up to 80–90% of outstanding RD balance (varies by bank)
- Interest rate: typically RD rate + 1–2% per annum
- Repayment: can be done in EMIs or bullet payment at maturity
- Your RD continues to earn interest at the original rate throughout the loan tenure
- Post Office allows loan up to 50% of balance after 12 months
Documents Required to Open RD
How to Open RD Online
Open your RD account in under 5 minutes from anywhere in India.
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Choose Your Bank or Post Office
Compare interest rates from the table above. Consider factors like rate, tenure flexibility, minimum deposit, and your existing banking relationship.
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Login to Internet Banking or Mobile App
Use your bank's official app or net banking portal. If you don't have an account, open a savings account first (takes 10 minutes with video KYC).
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Navigate to "Open RD" / "Deposits" Section
Look for "Fixed Deposits & RD" or "Savings Products" in the menu. Select "Open Recurring Deposit" or equivalent option.
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Enter Monthly Amount and Tenure
Choose how much you want to deposit each month and for how long. Use the RD Calculator to preview your maturity amount before committing.
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Confirm and Activate
Review the terms — interest rate, auto-debit date, maturity date, and TDS applicability. Confirm with OTP. Your first installment is deducted immediately.
Common Mistakes to Avoid
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Choosing the Wrong Tenure Opening a 5-year RD for a 1-year goal forces premature withdrawal with penalties. Always align RD tenure with your actual target date.
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Ignoring Taxation Many investors forget to declare RD interest in their ITR. This leads to tax notices later. Always account for tax when calculating net returns.
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Missing Monthly Installments A missed EMI attracts a default penalty (usually ₹1–2 per ₹100 per month). Multiple missed installments can lead to RD closure. Set up auto-debit.
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Not Comparing Rates Across Banks Even a 0.5% difference in rate significantly impacts your maturity amount over 3–5 years. Always compare before opening. Use the rates table above.
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Breaking RD Early for Minor Expenses The premature withdrawal penalty erodes your returns. Consider a loan against RD instead for temporary cash needs, or maintain a liquid emergency fund separately.
Best RD Accounts in India (2026)
Our curated recommendations based on interest rate, reliability, and digital experience.
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01
🥇 Best Overall — Axis Bank RD
Competitive rates, excellent mobile app, instant online opening, flexible tenure options.
6.80% -
02
🥈 Best for Senior Citizens — ICICI Bank RD
Up to 7.50% for seniors, dedicated relationship managers, easy online management.
7.50% sc -
03
🥉 Best Public Sector Bank — SBI RD
Pan-India reach, trusted brand, Government of India ownership, extensive branch network.
6.50% -
04
🏅 Best Private Bank — HDFC Bank RD
Seamless digital experience, auto-debit reliability, zero hidden charges.
6.50% -
05
🏅 Best Small Savings Option — Post Office RD
Government-backed, available at 1.5 lakh+ post offices, perfect for rural investors.
6.70%
Calculate Your RD Maturity Amount
Use Arthzo's free RD Calculator for detailed projections, year-wise breakdown, and comparison across tenures.
Open RD Calculator →Frequently Asked Questions
Everything you need to know about Recurring Deposits, answered.
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RD and FD serve different purposes. If you have a lump sum, FD is simpler and offers marginally higher rates. If you earn monthly and want to save progressively, RD is the better structured tool. Both are equally safe. Choose based on your cash flow — not just the rate.
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Yes. Premature withdrawal is allowed at most banks and the Post Office (after 3 years for PO RD). A penalty of 0.50%–1.00% below the earned rate is typically applied. No interest is paid if closed within 7 days of opening (ICICI Bank rule).
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The minimum RD deposit is ₹100/month at Post Office RDs and many public sector banks like SBI and PNB. Private banks like HDFC and Axis Bank typically have a minimum of ₹500/month, and ICICI starts at ₹500/month.
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No. RD interest is fully taxable as "Income from Other Sources" and added to your total income. It is taxed at your applicable income tax slab rate. TDS is deducted if interest exceeds ₹40,000/year (₹50,000 for seniors). Submit Form 15G/15H to avoid TDS if your income is below the taxable limit.
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Among major banks, Axis Bank and ICICI Bank offer some of the highest rates at around 6.80% and 7.00% respectively for general citizens. Senior citizens can get up to 7.50% at ICICI. Small Finance Banks offer even higher rates (up to 8%+) but with higher risk. For the safest option with high rates, compare SBI, Axis, and ICICI.
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Yes. All major banks allow online RD account opening through their internet banking portal or mobile app. You can also use their app to track, modify, or close the RD. The process takes less than 5 minutes if you already have a savings account.
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Post Office RD carries a sovereign government guarantee — marginally safer than bank RDs. However, it offers only a fixed 5-year tenure (less flexible) and the rate is currently 6.70%. Banks offer more flexible tenures and some offer higher rates. For maximum safety, choose PO RD. For flexibility and potentially higher rates, choose a major bank.
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A default penalty is charged — typically ₹1–2 per ₹100 of the installment per month of delay. If multiple installments are missed consecutively, the bank may close the RD and credit the accumulated amount (with reduced interest) to your savings account. Always set up auto-debit to avoid this.
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Yes. There is no restriction on the number of RD accounts you can hold — across the same bank or different banks. Many investors open multiple RDs for different goals (vacation, emergency fund, education) simultaneously.
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RD maturity is calculated using: M = R × [(1 + i)ⁿ – 1] / (1 – (1 + i)^(-1/3)) where R = monthly installment, i = quarterly interest rate (annual rate ÷ 4), and n = total number of quarters. Use the Arthzo RD Calculator for instant calculations without doing the math yourself.
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Yes. Bank RDs are covered by DICGC (Deposit Insurance and Credit Guarantee Corporation) up to ₹5 lakh per depositor per bank. Post Office RDs carry a sovereign Government of India guarantee with no upper cap.
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Yes. Most banks offer a loan or overdraft of up to 80–90% of your RD's accumulated value. The interest rate is typically 1–2% above your RD rate. This is a smarter alternative to premature withdrawal — your RD continues earning interest while you have access to funds.
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Bank RDs typically offer tenures from 6 months to 10 years in multiples of 3 months. Post Office RD has a fixed 5-year tenure. Choose tenure based on your goal — short-term goals (6–12 months) or medium-term goals (2–5 years).
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Yes. RD interest is compounded quarterly at most banks and post offices. This means interest is calculated and added to the principal every 3 months, and future interest is earned on this higher amount — the power of compounding works in your favour.
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Yes. NRIs can open NRE RD (interest tax-free in India) or NRO RD (interest taxable in India) accounts. NRE RD funds are freely repatriable. Consult your bank's NRI services desk for specific eligibility and documentation requirements.
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Both involve fixed monthly investments. RD offers guaranteed returns (6–7.5%) with zero risk — ideal for short-term goals and capital protection. SIP in mutual funds offers market-linked returns with higher long-term potential (10–14% historically) but no capital guarantee. Use RD for safety, SIP for long-term wealth creation.
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No. The monthly installment amount is fixed at the time of opening and cannot be changed. If you want to invest a different amount, you need to open a new RD account. Some banks offer "Flexible RD" or "Variable RD" products that allow changing amounts — check with your specific bank.
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On maturity, the total amount (principal + interest) is automatically credited to your linked savings account. Some banks may auto-renew for the same tenure if no instructions are given. Always check your bank's auto-renewal policy and give instructions before maturity if needed.
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Yes. Senior citizens (60+ years) get an additional 0.25%–0.50% interest on RDs at most banks. With ICICI, senior citizens can earn up to 7.50% on RDs — one of the best guaranteed returns available. RD's capital safety and regular income make it very suitable for retirees.
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Quick approximation: Multiply your monthly deposit by total months to get total principal. Then add roughly 50–55% of one year's interest as an estimate for medium tenures. For an exact calculation, use the Arthzo RD Calculator which computes quarterly compounding accurately.
A Recurring Deposit (RD) is a low-risk savings product offered by Indian banks and post offices that allows investors to deposit a fixed amount monthly and earn guaranteed interest compounded quarterly. In 2026, RD rates at major banks range from 6.35% to 7.00% for general citizens and up to 7.50% for senior citizens. RD interest is fully taxable under "Income from Other Sources." TDS applies if interest exceeds ₹40,000/year (₹50,000 for seniors). Before opening an RD, compare interest rates, align tenure with your goal, account for taxation in net return calculations, and verify premature withdrawal terms. For short-term, capital-protected goals of 1–3 years, RD is an excellent choice. For long-term wealth creation (5+ years), consider pairing RD with SIP in equity mutual funds.