Recurring Bank Deposits
Recurring Bank Deposits stands for the specific amount to be deposited in bank on monthly basis for a fixed rate of interest after a fixed term or tenure. Once the tenure is completed you will get the
principle sum as well as the interest earned during that period. The rate of interest in Recurring Bank Deposits generally higher than that of Saving Accounts and it depends on the term and the amount you
invested in the Deposits. The rate of interest is higher if you invested more and for longer period of time and vice versa. This scheme is the best option of investment for low earning groups.
Features of Recurring Bank Deposits
There is a great flexibility in the tenure of deposits ranging from 6 months to 120 months. The minimum monthly deposit can be RS 100 but this amount varies from bank to bank. However, the upper limit of
investment is not there in Recurring Bank Deposits. You can invest as much as you can. The rate of interest is generally between 7% to 13% depends upon the maturity period and the amount invested. One can avail Loan/overdraft facility also against Recurring Bank Deposits. The deposits shall be paid on monthly basis as installments and each of the installments shall be paid before the end of the month and equal to the first deposit. In case of default activity in payment or delay in deposits a penalty is levied on the policy holder at the rate of RS 1.50/ for every RS 100/ per month if he/she invested for a period of 5 years and RS 2/ deducted per RS 100/ in case of longer maturities.
Since, Recurring Bank Deposits offers fixed rate of interest, it doesn’t protect you against inflation. Even you would be suffered with lower rate of interest on recurring deposit during inflation which can
drastically lower down your returns. You can withdraw the amount before the fixed tenure but in this case you have to suffer with loss of interest.
How to open a RD Account
Anyone can open a Recurring Bank Deposit account at any bank in India. However, some banks make it compulsory to have a savings bank account with to operate Recurring Deposit account. The terms and conditions vary from bank to bank.
Recurring Bank Deposits stands for the specific amount to be deposited in bank on monthly basis for a fixed rate of interest after a fixed term or tenure. Once the tenure is completed you will get the
principle sum as well as the interest earned during that period. The rate of interest in Recurring Bank Deposits generally higher than that of Saving Accounts and it depends on the term and the amount you
invested in the Deposits. The rate of interest is higher if you invested more and for longer period of time and vice versa. This scheme is the best option of investment for low earning groups.
Features of Recurring Bank Deposits
There is a great flexibility in the tenure of deposits ranging from 6 months to 120 months. The minimum monthly deposit can be RS 100 but this amount varies from bank to bank. However, the upper limit of
investment is not there in Recurring Bank Deposits. You can invest as much as you can. The rate of interest is generally between 7% to 13% depends upon the maturity period and the amount invested. One can avail Loan/overdraft facility also against Recurring Bank Deposits. The deposits shall be paid on monthly basis as installments and each of the installments shall be paid before the end of the month and equal to the first deposit. In case of default activity in payment or delay in deposits a penalty is levied on the policy holder at the rate of RS 1.50/ for every RS 100/ per month if he/she invested for a period of 5 years and RS 2/ deducted per RS 100/ in case of longer maturities.
Since, Recurring Bank Deposits offers fixed rate of interest, it doesn’t protect you against inflation. Even you would be suffered with lower rate of interest on recurring deposit during inflation which can
drastically lower down your returns. You can withdraw the amount before the fixed tenure but in this case you have to suffer with loss of interest.
How to open a RD Account
Anyone can open a Recurring Bank Deposit account at any bank in India. However, some banks make it compulsory to have a savings bank account with to operate Recurring Deposit account. The terms and conditions vary from bank to bank.
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