What is Recurring Deposit?
Recurring Deposit is one of the very important and unique term deposit. Recurring Deposits are offered by all public sector banks, private sector banks, small finance banks, Co-operative banks and other financial institutions in India. This is considered is a an important mode of investment for two reasons – it encourages a regular savings habit among the investors and provides a decent returns on the invested deposit amount.
Under this deposit, investors can fix up an affordable amount from his monthly savings and has to keep depositing this fixed amount on monthly basis regularly up to the maturity period. Upon the completion of the maturity period, the investor can withdraw the principal amount along with the accumulated interest amount. Failing to deposit the monthly installment may result in charge of a penalty. This amount will be determined upfront while opening the account.
Recurring Deposit Interest Rates – September 2017
Interest from Recurring deposit is generally compounded on quarterly basis. Interest offered by various banks and financial institutions for recurring deposits ranges from 4.50% to 8.40%. As per the strict guidelines of Reserve Bank of India, the interest rate will not be changed during the tenure. The tenure of a Recurring Deposit ranges from 6 months to 10 years. Investor can choose the tenure depending on his needs and interest factor.