Everything To Know About Recurring Deposits

By Author: Shashank Bhaskar
Total Articles: 63
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Deposits promote the habit of saving and instil financial discipline. They also provide monetary assistance during emergencies. It allows you to withdraw them any time you want quickly. You can also extend the deposit tenure if need be. Hence, in simple terms, deposits are flexible investment options.
These days, one of the most popular types of deposits is a Recurring Deposit. It is an investment tool that lets you make timely investments. It offers a competitive interest rate to help you build your investment effectively. The following are some of the aspects of an RD to help you understand its functions better:
Scheme structure
An investment channel that follows an orderly system where the depositor invests at regular intervals.

Amount

The depositor must invest the amount every month in an RD Account. This goes on for a predetermined period, also known as tenure.

Returns

An RD allows the depositor to earn decent returns. Plus, the interest earned ...
... is relatively less in comparison to an FD.

Interest rate

The interest rates on a Recurring Deposit Account entirely depend on its type. For example, an RD for NRI might have higher interest rates than a regular one. It is wise to select the kind strategically.

Market risks

Like a Fixed Deposit, an RD is also not market-driven. Thus, it provides risk-free opportunities to investors.

Eligibility

Apart from having an active Savings Account, the depositor must abide by other guidelines. For instance, say you have a Savings Account. In addition to this, you should also have a regular source of income. The proof of the same should be presented at the time of the application.

Tenure

The depositor may open an RD online in terms. This includes short-term, mid-term, and long-term. But if it must be generally specified, the tenure ranges between 6 months to 1 year and beyond. Also, this duration can vary from bank to bank.
How to open a Recurring Deposit?
Nowadays, you can open an RD both online and offline. The process for the former, however, is relatively more straightforward. You need to visit your banking partner’s website or use the Banking app. There, find the option to apply for an RD. The offline means of opening an RD is physically visiting your banking partner’s nearest branch.
The bank’s executive will give you an application form that should be filled out duly. This form needs you to specify the instalment amount, payment mode, deposit tenure, etc.