Recurring Deposit

It is a saving avenue that works like the systematic investment plan of a mutual fund, wherein a particular amount of money is deducted from your account every month. You have to apply for a recurring deposit account and ask the bank to deduct the stipulated amount from your savings or current account every month. You can deposit a specified amount (multiples of Rs. 100/- monthly) for 12, 24, 36, 60 months. Once the deposit matures you will be returned the deposited amount plus the interest. Under a Recurring Deposit account (RD account), a specific amount is invested in the bank on a monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum, as well as the interest earned during that period, is returned to the investor. Recurring Bank Account provides the element of compulsion to save at high rates of interest applicable to Term Deposits along with liquidity to access those savings anytime. Since a recurring deposit offers a fixed rate of return, it does not provide protection against inflation. The advantage of opening a Recurring Deposit Account that the Depositor would be able to save certain sums in fixed monthly Installments so that he/she would be able to meet an anticipated liability/obligation after the end of a specified period.