📖 What is a Recurring Deposit (RD)?
Recurring Deposit (RD) is a popular savings scheme offered by banks and post offices where you deposit a fixed amount every month. Your money grows with compound interest, and you receive a lump sum at maturity. It's ideal for disciplined monthly savers who want to build a corpus over time.
📐 RD Formula
M = R × [{(1+r/n)^(n×t) - 1} / {(1+r/n)^(1/n) - 1}]
M = Maturity R = Monthly Deposit r = Interest Rate n = Compounding t = Years
🏦 RD Interest Rates (2026)
| Bank | RD Rate | Feature |
|---|
| SBI | 6.8% - 7.0% | 1-10 years |
| HDFC | 7.2% - 7.5% | Senior citizen +0.5% |
| ICICI | 7.0% - 7.3% | Monthly payout |
| Axis | 7.1% - 7.4% | Flexible tenure |
| Kotak | 7.3% - 7.6% | Highest among private |
| Post Office | 6.7% - 7.0% | Government backed |
✅ Benefits of RD
- Disciplined monthly savings
- Guaranteed returns, no market risk
- Flexible tenure: 6 months to 10 years
- Low minimum: ₹100-₹500/month
- Loan up to 90% of RD amount
💰 Tax on RD
Interest earned on RD is fully taxable. TDS at 10% if interest exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS.
❓ FAQ
❓ What is a Recurring Deposit (RD)? ▼
A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount every month. At maturity, you receive total invested amount plus compound interest.
❓ How is RD interest calculated? ▼
RD interest is calculated using quarterly compounding formula: M = R × [{(1+r/n)^(n×t) - 1} / {(1+r/n)^(1/n) - 1}].
❓ Which bank has the highest RD rate? ▼
Kotak Mahindra Bank offers highest RD rates (7.3-7.6%), followed by HDFC (7.2-7.5%). Small finance banks offer even higher rates.
❓ Is TDS deducted on RD interest? ▼
Yes, TDS at 10% is deducted if total interest exceeds ₹40,000 per year (₹50,000 for senior citizens).
❓ RD vs FD - which is better? ▼
RD is better for regular monthly savings like a monthly SIP. FD is better if you have a lump sum to invest.