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Bank & Small Savings

Recurring Deposit (RD)

Save a fixed amount every month at a fixed rate — disciplined, guaranteed saving.

~6.5–7.5% (banks) · 6.7% (Post Office 5-yr)Interest taxed at your slab

What is RD?

A recurring deposit is the FD's monthly cousin: you commit a fixed amount every month for a fixed tenure at a fixed rate, and the bank compounds it (usually quarterly). It suits salaried savers building a habit or a near-term goal — you get FD-like safety and returns without needing a lump sum up front.

Interest rate
Bank RD ~6.5–7.5%; Post Office 5-yr RD 6.7%
Tenure
6 months to 10 years (banks); 5 years (Post Office)
Deposit
Fixed amount every month
Compounding
Quarterly
Tax
Interest taxable at slab; TDS above ₹40k (₹50k seniors)/yr

Calculate

₹
₹100₹10,00,000
Years
1 Years10 Years
% p.a.
1 % p.a.15 % p.a.
Maturity value
₹7.18 L
after 5 years
You invest
₹6.00 L
Interest earned
₹1.18 L

Indicative only. Uses a level rate you can see above; a bank/post office may differ by a few rupees due to day-count, minimum-balance and compounding conventions.

RD — The Complete Guide

15 questions answered — everything from eligibility and HUF/NRI rules to tax, withdrawals and edge cases.

The basics

What is a recurring deposit?
An RD lets you deposit a fixed amount every month for a fixed tenure at a fixed rate. It's the FD's monthly cousin — you build the corpus gradually instead of parking a lump sum, and the maturity value is guaranteed and known up front.
How is an RD different from an FD?
An FD needs a lump sum up front; an RD is funded by equal monthly instalments. Both give fixed, guaranteed returns at similar rates. Use an RD when you want to save out of monthly income; use an FD when you already have a lump sum to lock away.
How is an RD different from a mutual-fund SIP?
An RD gives a fixed, guaranteed return with zero market risk — the bank tells you the maturity value in advance. A SIP is market-linked: returns aren't guaranteed and can be higher or lower. RDs suit short-term, capital-safe goals; equity SIPs suit long-term wealth-building where you can ride out volatility.
What tenures are available?
Bank RDs run from 6 months to 10 years. Post Office RD has a fixed 5-year term (extendable). You commit the monthly amount and tenure at the start.

Interest & rates

What RD rate can I get?
Bank RD rates broadly track their FD rates — around 6.5%–7.5% in 2026, with seniors getting a small add-on. The Post Office 5-year RD pays 6.7% (Q2 FY2026-27). Our calculator lets you enter the exact rate offered.
How is RD interest calculated?
Each monthly instalment earns interest for the number of months it remains invested, compounded quarterly. Your first instalment earns the most (invested longest), the last one the least. Our calculator uses monthly compounding as a close approximation — a bank may differ by a few rupees.

Opening an RD

Who can open an RD?
Resident individuals (single or joint), minors via a guardian, and NRIs (through NRE/NRO accounts). You usually need a linked savings account so the monthly instalment can be auto-debited.
Can I change the monthly amount later?
No — a standard RD fixes the instalment for the whole tenure. If you want to save more, open a second RD. Some banks offer "flexi RD" variants that allow a variable monthly amount within a band.

Tax & TDS

Is RD interest taxable?
Yes — RD interest is fully taxable at your slab, just like FD interest. Banks deduct 10% TDS once RD interest crosses ₹40,000 a year (₹50,000 for seniors). Submit Form 15G/15H if your income is below the taxable limit to avoid TDS.
Does Post Office RD deduct TDS?
No, the Post Office does not deduct TDS on RD interest — but the interest is still fully taxable in your hands and must be declared in your return. "No TDS" is not the same as "tax-free".

Missed payments & exits

What if I miss a monthly instalment?
Banks charge a small penalty per missed instalment and may close the account after a few consecutive defaults. Post Office RD lets you revive a defaulted account within a window on paying a default fee. Set up a standing instruction/auto-debit to avoid misses.
Can I close an RD early?
Premature closure is generally allowed after a minimum period (often 3 months at banks; after 3 years for Post Office RD), but you'll get a lower interest rate for the period held and possibly a penalty. Breaking early defeats much of the RD's purpose.
Can I take a loan against my RD?
Yes — many banks and the Post Office offer a loan or overdraft of up to 50%–90% of the RD balance, which is usually cheaper than breaking the deposit for a short-term need.

Good to know

Who is an RD best suited to?
Salaried savers building a habit, anyone saving for a near-term goal (a trip, a gadget, an emergency buffer), or conservative savers who want guaranteed growth without market risk. For long-horizon goals like retirement, an equity SIP has historically done more of the heavy lifting.
Can I have a nominee on my RD?
Yes, and you should add one at opening so the proceeds pass smoothly to your chosen person. You can update the nominee later too.

Related tools & guides

Fixed Deposit (FD) Daily SIP calculator SIP vs Lumpsum

Educational information only, not investment advice. Interest rates for government small-savings schemes are set by the Government of India and reviewed every quarter; bank FD/RD rates vary by bank and tenure. Figures are indicative — confirm the current rate and rules with the bank/post office before investing. Calculator results are for illustration purposes only. Actual returns may vary based on market conditions, fund performance, and other factors.

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