Recurring deposit is a kind of offering from the banks in which an investor has to deposit regular fixed monthly payments for a certain period of time till the maturity of the account. It is an investment tool which helps those investors who has ability to invest fixed regular monthly amount of money in their recurring account and earn decent amount of interest on their deposits. These are also useful for those people who want to save their money on regular basis for a certain period of time and earn decent amount of money on their savings. It is quite different from Fixed Deposit account as RD is not as rigid as the FD account in terms of money deposit and it provides golden opportunity for the salaried person to save his/her some part of income for future expenses.
In India almost all the major private and government under taking banks offer this facility to its prospective as well as regular customer to open a Recurring Account in their nearby branches. The term of maturity for this type of account starts from 6 months and maximum time of maturity of account would be 10 years. The interest rate which is decided in the starting of the account will remain same during the entire tenure of account, no matter how much you deposited into the account in the last period of your account.
Features & Advantages of Recurring Deposit
It is a good opportunity for people to save his part of monthly income by depositing it in bank or post office where you open a recurring account.
It is one of the safest ways of investing money because the deposit amount doesn’t have any connections with the financial market turbulences and the investor gets the entire principal as well as interest amount at the time of maturity of the account.
Investor who has proper KYC documents and capable of deposit regular funds can able to open this account in banks and in post office
In India the minimum amount an investor can deposit in the recurring account is Rs 10 per month.
No withdrawals are allowed during the time of account tenure is going on but in emergency cases banks may close the account on the request of the investor before the maturity period.
Many banks accept RDs as collateral and allow loan to the applicants.
No matter how regularly you deposit your monthly amount but if you miss any of your monthly deposit amount in between your tenure than bank may charges penalty on it.