Recurring Deposit and it's types in India

Recurring Deposit (RD) is a popular investment option in India. Customers can choose their investment amount and tenure, as well as a variety of other benefits.

This investment tool, which is available in flexible tenure options ranging from 6 months to 10 years and is offered by multiple banks and NBFCs, helps channelize monthly savings for long or short-term corpus creation.

The list of such RD types is shown below:

1. Regular Recurring Deposit Accounts: The majority of Indian banks and NBFCs provide this type of RD account. If a person is at least 18 years old, they are eligible to open an account. You must select a tenure and recurring amount before you can start an account. There are two ways to compute interest: simple and compound. The lump sum can be withdrawn at the end of the tenure; no further funds may be put during the current tenure. Available tenures and minimum deposit amount required differ from bank to bank (or NBFC).

2. RD Account for Minors: Under the supervision of their parents or guardians, several banks also permit people under the age of 18 to open an RD account. The funds can be used by parents to fund their children's education and other life goals. The returns offered by this plan are either comparable to those of conventional accounts or even higher.

3. Senior Citizens Recurring Deposit Account: Senior citizens can apply for RDs, and most banks provide them at greater interest rates than the general rate of interest. For this, the bank sets the minimum sum and the term. Every three months, the interest is compounded. Most banks give an additional 0.50% to 0.75% in interest to senior citizens, over and above the going rate for normal investors.

4. NRI/NRE Recurring Deposit Account: The opportunity to open an NRE/NRO recurring deposit account is also made available by banks to non-resident Indians. With tiny monthly deposits, NRIs can amass a sizable sum of money which significantly increases their savings.

5. Tax Saving Recurring Deposit Account: Based on the interest amount, the interest received on a recurring deposit account is taxed. Tax Saving Deposits have limitations imposed by prevalent income-tax laws. Typically, the amount of investment in such tax-saving deposits which will not be taxed are limited by the total investment amount allowed under Section 80C in a given year, and similar income-tax rules.

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