Best Recurring Deposit Interest Rates in India

byDilip PrasadLast Updated: March 12, 2024
recurring deposit interest rate

A recurring deposit (RD) stands out as a popular savings instrument, offering individuals the opportunity to grow their savings steadily without exposing themselves to unnecessary financial risks. Within the framework of a recurring deposit, individuals commit to depositing a fixed amount each month for a specified duration. At the end of the agreed-upon term, they receive their initial principal along with accrued interest.

In this guide, we’ll make understanding RD interest rates easy. Whether you’re new to saving or a seasoned investor, we’ll help you discover the top RD interest rates available in India.

Recurring Deposit Interest Rates in India for 2024

Interest Rates for Regular Citizens

For regular citizens, recurring deposit interest rates in India for 2024 vary depending on the bank and the tenure of the deposit. Here’s a breakdown of the interest rate ranges you can expect:

  • Lower Range: Some banks offer relatively conservative interest rates, starting at around 3.00% for shorter tenures, such as 1 year. These rates gradually increase as you opt for longer tenures.
  • Mid-Range: Many banks provide competitive rates in the mid-range, ranging from approximately 4.00% to 6.00%. These rates are applicable to RDs with tenures spanning 1 to 5 years.
  • Higher Range: For those looking for higher returns on their savings, some banks offer interest rates in the higher range, typically between 6.00% to 7.50% for tenures extending beyond 5 years.

Interest Rates for Senior Citizens

Senior citizens often enjoy preferential rates, which can significantly boost their earnings from recurring deposits. Here’s a breakdown of the interest rate ranges available to senior citizens:

  • Lower Range: Special rates for senior citizens may start at around 3.00% for shorter tenures. These rates gradually increase as the tenure of the RD extends.
  • Mid-Range: Many banks offer senior citizens competitive mid-range rates, ranging from approximately 4.00% to 6.50%, depending on the tenure.
  • Higher Range: For longer tenures, some banks extend higher interest rates to senior citizens, reaching up to approximately 8.00%.

Read more: Post Office Saving Schemes

How Does a Recurring Deposit Account Work?

The minimum recurring deposit amount starts from as low as Rs.100, making it accessible for individuals with varied monthly incomes. The maximum tenure for an RD is 10 years. Depending on the tenure, the recurring deposit interest rates vary. 

The interest earned from an RD account is taxable. The tax payable depends on the tax slab a person falls in. Opening and maintaining an RD account is simple and hassle-free. Every month, the predetermined amount gets debited from the savings or current account. 

In case of delayed payment of instalments or premature withdrawal, one needs to pay penalties. The penalties and other associated charges are applicable based on the concerned bank’s policy. 

Note that the recurring deposit interest rates keep changing from time to time. Thus, it is better to use an RD calculator to check your returns before committing to one.  

Documents You Need to Open an RD Account

  • Identity Proof (any one)
  • Income Proof (any one)
  • Aadhaar Card
  • Bank statement for the last 6 months
  • PAN Card
  • Salary slips of the last 6 months
  • Voter ID
  • Employee ID card
  • Driving Licence
  • Tax Receipts of the last year
  • Passport

*Banks may also ask for additional documents as and when necessary. 

How to Calculate the Interest on a Recurring Account?

The interest accrued on a recurring account can be calculated manually. However, for accuracy and swift calculation, one can also use a recurring deposit interest rate calculator available online for free. 

In both cases, the basic formula below is used:

A = P*(1+R/N)^(NT)

Here, A = Maturity sum; P = Principal; R = Rate of Interest; N = Frequency of Compounding; T = Tenure. 

For instance, a person applies for a recurring deposit account with a monthly amount of Rs.5000 for a tenure of 2 years. The bank is offering a recurring deposit interest rate of 8%. 

The maturity amount would be = Rs.1,30,456. 

Things to Consider While Choosing an RD Account

Following are some important tips to make the most of your recurring deposit account and maximise savings:

  1. Choosing the Right Bank

Choosing the right bank is necessary to get all the benefits an RD account offers. However, if you want to qualify for the best recurring deposit interest rates in India, you must compare them online to make an informed decision. Give it some time to go through different options and make an informed decision. 

  1. Decide the Tenure and Recurring Deposit Amount Carefully

Before applying for an RD account, you must select a tenure that matches your investment goals. Likewise, how much money you want to invest is also a crucial factor that needs serious consideration. It is better to commit to an amount you can pay monthly without burdening your finances. 

For instance, you want to pay a professional course fee in 12 months. In that case, you can choose that time as the tenure for your RD account. It will help you achieve your financial goals with better clarity. You can have smaller goals or big goals for your RD. 

  1. Avoid Untimely Withdrawal

Premature withdrawal of RD amount can cost you penalties. Thus, if you want to leverage the RD maturity sum with projected returns, avoiding partial or complete withdrawal of funds before the tenure ends is better. 

  1. Nomination Option 

Another thing you need to remember is to always add a nominee to your RD account. It will safeguard the investment. Your nominee can be anyone; your wife, mother, father, children, or husband. 

Read more: Are You an Intelligent Investor or an Average Investor


Recurring deposit accounts are an ideal choice for people who have short-term or long-term financial goals to fulfil. Since recurring deposit interest rates determine the return on investment, it is wise to search for the banks that offer the most competitive ones. Note that besides banks, you can also open an RD account at the Indian Post Offices. However, in that case, you need to consider certain terms and conditions before making up your mind. 


How is the interest rate on Recurring Deposit calculated?

The interest rate on a Recurring Deposit is usually fixed at the time of opening the account. It is calculated on a quarterly basis on the amount deposited each month and added to the principal for further interest calculation.

How often do banks change their RD interest rates?

Banks may change their RD interest rates periodically, depending on various factors such as the RBI’s monetary policy, liquidity needs, and market conditions.

Is the interest earned on RDs taxable?

Yes, the interest earned on RDs is taxable as per the Income Tax Act. The interest is added to the depositor’s taxable income and taxed at the applicable income tax slab rate.

Can I withdraw my RD prematurely, and will I still earn interest?

Yes, most banks allow premature withdrawal of RDs subject to certain conditions and penalties. However, the interest earned on the withdrawn amount may be lower than the promised RD interest rate.

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