Different Types of Recurring Deposit

21 Mar 2023

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What are the types of Recurring Deposit?

Recurring Deposit (RD) is an easy and convenient way to start regular savings. In this, a fixed amount is deposited every month and earns interest at a predetermined rate. RD can be opened with any Bank, Post Office or NBFC by any person, a senior citizen, a minor above 10 years with a guardian, partnership firms, clubs, associations and NRIs. The rate of interest varies across financial institutions and the tenure ranges from 6 months to 10 years.

There are various types of RDs to suit the different financial needs of every individual. It is a perfect way to collect lump sum money by saving small amounts and earning high interest on it. Types of Recurring Deposits are discussed as follows -

Baroda Recurring Deposit Scheme

This is a Recurring deposit scheme offered by the Bank of Baroda. It is a basic monthly plan that accumulates small savings over a certain period. The interest gets accrued over the tenure and is paid at maturity.

Features of this RD account are as below -

Eligibility Any individual, or minor above 10 years of age with a guardian, Clubs, associations, or partnership firms (NRE account holders are not allowed)
Tenure 6 months to 120 months
Amount Minimum ₹ 50 (in rural areas) and ₹ 100 (in urban areas); thereafter in multiples of 50 and 100 respectively
Interest Quarterly compounding; Interest is credited with Principal at Maturity
TDS TDS will be deducted as per the income tax extant guidelines.
Loan Facility Available up to 95% of the outstanding deposit amount

Baroda Flexible Recurring Deposit Scheme

This is a unique kind of RD offered by the Bank of Baroda. A basic monthly saving plan, which helps customers to regulate their savings for higher returns with liquidity.

The interest is credited to the Savings account twice a year (September and March). For senior citizens, an additional 0.5% is given for deposits below ₹ 1 crore.

Features of this RD are summarized below -

Eligibility Any individual, or minor above 10 years of age with a guardian, Clubs, associations, or partnership firms (NRE account holders are not allowed)
Tenure 12 months to 120 months
Amount ₹100 (thereafter in multiples of 100)
Interest Half-yearly compounding; Interest is credited to the Savings account twice a year in September and March
TDS TDS will be deducted as per the income tax guidelines.
Loan Facility Available up to 95% of the outstanding deposit amount

NRI Recurring Deposit

Non-resident Indians or NRIs can also start RD from their NRO or NRE accounts. A major advantage of opening an NRE Recurring deposit is that it is not taxable. All the interest earned on NRE FD is tax-free. However, NRO FD is taxed at 30% plus the applicable surcharge and cess subject to change as per extant guidelines. The maturity amount of NRE RD is fully repatriable but there is a limit of 1 USD Million for repatriation on NRO RD subject to change as per extant guidelines.


Recurring Deposit is a great investment tool to meet short-term financial goals with ease. It is also very effective in creating a habit of saving. RD is a convenient way to accumulate a lump sum amount of money over a period of time. Anyone can start an RD easily including minors and senior citizens. If a Savings account already exists with a bank then no extra documentation is required. The process is fast and simple which makes RD a very attractive savings tool among all age groups and income classes.

Also Read: How to Open a Recurring Deposit Account

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Features and Benefits of Investing in Recurring Deposit

The best way to grow your corpus and begin investing is to put money into an investment regularly. Investments that call for regular installments not only help to build up savings, but they also enforce discipline among the investors. One of the most popular investments that meets the description above is a recurring deposit or RD. Read this handy guide to know what are the features and advantages of RD account.

Premature Withdrawal of Fixed Deposit: Penalty Charges & Alternative Options

Most savers like to earn some income passively over and above their regular income flow. Fixed deposits offer them a diversification route for investing their savings. When a saver invests in a fixed deposit, they earn a guaranteed income over a fixed term of the investment. Fixed deposits, also known as term deposits, are suitable for both; working professionals and retired senior citizens. Fixed deposits range in tenor from 7 days and go all the way up to 10 years. The interest rate offered by different banks and financial institutions varies according to the tenor as well as the credit rating of the bank. Each bank has its own terms and conditions for offering fixed deposits to the members of the public.

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