Yes, RD is one of the safest investment options. Deposits in scheduled banks are insured up to ₹5 Lakhs by DICGC (RBI subsidiary).

Can I stop RD in between?

Yes, you can close an RD prematurely. However, banks usually charge a penalty of 1% on the interest rate applicable for the period the deposit remained with the bank.

Is RD interest taxable?

Yes. Interest earned on RD is added to your total income and taxed as per your income tax slab. TDS (10%) is deducted if interest exceeds ₹40,000 (₹50,000 for seniors) in a year.

RD Calculator – Check Recurring Deposit Maturity & Interest (2026)

Understanding Recurring Deposits (RD)

A Recurring Deposit (RD) is a special kind of Term Deposit offered by banks in India which helps people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits.

It is similar to making a fixed deposit of a certain amount every month. For example, depositing ₹5,000 every month for 5 years.

Why Choose Recurring Deposit? (Benefits)

Disciplined Savings: Since you have to deposit a fixed amount every month, it forces a saving habit.
Guaranteed Returns: Unlike Mutual Funds, RD returns are fixed at the time of opening the account. No market risk.
Small Ticket Size: You can start an RD with as little as ₹500/month.
Liquidity: You can break the RD prematurely (with a small penalty) or take a loan against it (up to 90% of value).

Latest RD Interest Rates (2026 Estimates)

RD rates generally track FD rates. Here is an approximate comparison for general citizens (Seniors usually get 0.50% extra).

Bank / Institution	1 Year Rate	3 Year Rate	5 Year Rate
SBI	6.80%	6.50%	6.50%
HDFC Bank	7.10%	7.00%	7.00%
ICICI Bank	7.10%	7.00%	6.90%
Post Office	6.70%	6.70%	6.70%

*Rates are subject to change. Please check with the respective bank before investing.

How is RD Interest Calculated?

The formula used for Recurring Deposit is the same as compound interest. However, since the money is deposited every month, the interest is calculated on each installment for the period it remains with the bank.

          Formula:

          M = P × n + I

          Where,

          M = Maturity Value

          P = Monthly Installment

          n = Number of quarters (compounded quarterly)

          I = Interest Earned

RD vs Mutual Fund SIP: Which is Better?

Should you put your ₹5,000 in an RD or a SIP? Here is the comparison:

Feature	Recurring Deposit (RD)	Mutual Fund (SIP)
Safety	High (Bank Guarantee)	Moderate (Market Risk)
Returns	Fixed (6% - 7.5%)	Variable (10% - 15%)
Taxation	Taxed as Income (Slab Rate)	LTCG @ 12.5% (Efficient)
Best For	Short term goals (< 3 Yrs)	Long term wealth (> 5 Yrs)

Taxation on RD

The interest earned on Recurring Deposits is fully taxable. It is added to your annual income and taxed according to your Income Tax Slab.

TDS on RD: If the interest income from FD and RD combined exceeds ₹40,000 (₹50,000 for Senior Citizens) in a financial year, the bank deducts TDS at 10%. If you do not provide PAN, TDS is 20%.

Frequently Asked Questions (FAQ)

Q1. Is RD safe?

Yes, RDs in scheduled banks are very safe. The DICGC covers deposits up to ₹5 Lakhs per bank.

Q2. What happens if I miss an RD installment?

Banks typically charge a penalty (around ₹1.5 per ₹100) for missed payments. If you miss multiple payments, the bank may close the account.

Q3. Can I deposit variable amounts in RD?

In a standard RD, the amount is fixed. However, banks offer "Flexi RD" schemes (like SBI Flexi Deposit) where you can deposit varying amounts each month.

Q4. What is the minimum RD period?

The minimum tenure for an RD is usually 6 months, and the maximum is 10 years.

Recurring Deposit (RD) Calculator