Recurring Deposits (RDs) continue to be one of the most reliable and discipline-friendly savings instruments in India in 2025. For monthly savers who prefer guaranteed returns – without market risk – RDs remain a go-to option. This guide covers everything you need to know: how RDs work, latest rate trends, bank-wise comparisons, maturity calculations, tax considerations, pros & cons, and smart tips to maximize returns.
What is a Recurring Deposit (RD)?
An RD is a savings and investment product offered by banks and post offices where you contribute a fixed amount every month for a predetermined period (tenure). The bank compounds interest (typically quarterly), and at maturity, you receive the total deposits plus interest earned. RDs are ideal for salaried people, regular income earners, and those wanting disciplined savings without market exposure.
How RD Schemes Work for Monthly Savers
- You commit a fixed monthly deposit (for example, ₹1,000, ₹5,000, ₹10,000 depending on your budget).
- Interest is calculated and compounded quarterly.
- At the end of the tenure, you receive total principal + accumulated interest.
- Typical tenures range from 6 months to 10 years.
- Because deposits are spread over time, it’s easier for many to build a corpus without waiting for a lump sum.
Why RDs Remain a Safe & Smart Option in 2025
- Guaranteed returns — independent of market volatility or economic cycles.
- Deposit insurance: Bank RDs are covered by deposit-insurance schemes (e.g. DICGC) up to the insured limit — giving added safety.
- Flexibility — small amounts can be started monthly, making RDs accessible even for low to mid income earners.
- Senior citizens often receive a bonus interest rate over general depositors, giving better real returns.
- Low risk — RDs don’t fluctuate like equities, making them suitable for conservative or retirement-oriented investors.
Types of Recurring Deposit (RD) Accounts
Banks and post offices in India offer different types of RD accounts to suit various financial needs. Here are the main RD types available in 2025, along with who they are best suited for:
1. Regular Recurring Deposit (Standard RD)
- Fixed monthly deposit amount throughout the tenure.
- Fixed interest rate decided at the time of opening the RD.
- Suitable for salaried individuals and people with stable income.
2. Senior Citizen Recurring Deposit
- Offers higher interest rates compared to regular RD accounts.
- Designed specifically for individuals aged 60 years and above.
- Ideal for retirees looking for safe, higher fixed-income returns.
3. Flexible or Variable Recurring Deposit
- Allows depositors to vary monthly deposit amounts within a permitted range.
- Perfect for freelancers, self-employed individuals, or people with irregular monthly income.
- Offered by select banks like ICICI (iWish RD) and Kotak Flexi RD.
4. RD Account for Minors
- Parents or guardians can open an RD on behalf of a minor.
- Helps build a disciplined savings habit for future financial goals.
- Can be converted to a regular RD after the minor turns 18.
5. NRE/NRO Recurring Deposit for NRIs
- Available for Non-Resident Indians under NRE or NRO account categories.
- NRE RDs may offer tax-free interest (depending on applicable rules), while NRO interest is taxable.
- Useful for NRIs wanting to save monthly in India and earn stable returns.
Each RD type caters to a specific need — whether it’s regular monthly savings, flexible deposits, senior citizen benefits, or NRI financial planning. Choosing the right RD account helps maximize returns and meet your individual savings goals.
Latest RD Interest Rates 2025: Bank-Wise
Here is a detailed breakdown of the recurring deposit (RD) interest rates offered by leading banks and financial institutions in 2025 — for both general depositors and senior citizens. These figures are indicative and can vary by tenure, deposit amount, and periodic rate revisions. Always check the bank’s official website before investing.
| Bank / Institution |
General RD Rate (Approx % p.a.) |
Senior Citizen RD Rate (Approx % p.a.) |
Remarks / Notes |
| State Bank of India (SBI) |
6.80% – 7.00% |
7.30% – 7.50% |
Reliable public-sector bank; stable rates. |
| HDFC Bank |
7.00% – 7.25% |
7.50% – 7.75% |
Popular private bank with flexible RD options. |
| ICICI Bank |
4.75% – 7.20% |
5.25% – 7.75% |
Wide network, easy online RD opening. |
| Axis Bank |
5.75% – 7.20% |
6.25% – 7.85% |
Decent yields among private banks. |
| Bank of Baroda (BoB) |
5.75% – 7.25% |
6.25% – 7.75% |
Public bank; widely accessible. |
| Punjab National Bank (PNB) |
6.05% – 7.30% |
6.55% – 7.80% |
Often competitive mid-term rates. |
| Canara Bank |
6.15% – 7.25% |
6.65% – 7.75% |
Public-sector coverage in many regions. |
| Indian Bank |
≈ 6.70% p.a. |
≈ 7.20% p.a. |
Standard RD scheme on offer. |
| Axis / Private-Sector Mid Banks (e.g. RBL, IndusInd) |
≈ 7.00% – 7.99% p.a. |
Up to ≈ 8.25% p.a. |
Often offer higher yields, but check deposit-insurance limits. |
| Yes Bank |
7.25% – 8.00% |
7.75% – 8.50% |
Top of the pack for RD yield among private banks. |
| AU Small Finance Bank |
7.25% – 8.50% |
Often higher (varies) |
Small-finance bank with competitive RD rates. |
| Equitas Small Finance Bank |
Up to 8.20% p.a. |
Typically 8.25% – 8.70% p.a. |
Among the highest yielding RD accounts in 2025. |
| Other Scheduled/Regional Banks (e.g. Karnataka Bank, Federal Bank, etc.) |
6.50% – 7.40% p.a. (varies by bank/tenure) |
Typically +0.50% over general rate |
Rates vary — check bank’s RD schedule before investing. ⚠️ |
Note: The ranges above represent typical interest slabs, combining shorter and longer tenures. RD rates may differ based on tenure, deposit amount, frequency of compounding, and senior citizen status. Always confirm with your bank’s official rate schedule before investing.
How to Calculate RD Maturity Amount in 2025
Calculating the maturity amount of a Recurring Deposit (RD) helps you know exactly how much you will receive at the end of the tenure. RD interest is typically compounded quarterly, and banks use a standard formula to compute the final maturity value.
M = R × ((1 + i)n − 1) / (1 − (1 + i)−1/3)
Where:
R = Monthly deposit amount
i = Interest rate / 4 (quarterly compounding)
n = Total number of quarters in the RD tenure
- You deposit a fixed amount every month.
- Each deposit earns interest for a different duration depending on when it was deposited.
- Interest is added every quarter and grows with compounding.
- The formula combines all monthly deposits and adds interest to calculate the final maturity amount.
Example: RD Maturity Calculation for 2025
Monthly Deposit (R): ₹5,000
Tenure: 5 years (60 months)
Interest Rate: 7.5% p.a. (compounded quarterly)
Total Deposit: ₹5,000 × 60 = ₹3,00,000
Approx Maturity Value: ₹3,55,000
Interest Earned: ~₹55,000
Factors Affecting Your RD Maturity Amount
- Monthly deposit amount: Higher deposit = higher maturity value.
- Interest rate offered by the bank: Even a 0.5% difference significantly impacts returns.
- Tenure of the RD: Longer tenure leads to more interest due to compounding.
- Compounding frequency: Quarterly compounding boosts maturity compared to non-compounded methods.
- Senior citizen benefits: Higher interest rates give better maturity value.
An RD maturity calculator is the simplest way to estimate your final amount and choose the best RD plan based on your goals and savings capacity.
Why Use an RD Calculator?
- Avoids complex manual calculations.
- Shows accurate maturity value instantly.
- Helps compare RD returns between different banks.
- Useful for planning monthly savings and financial goals.
Taxation & TDS on RD Interest (2025)
- RD interest is taxed as “Income from Other Sources”.
- If annual interest earned exceeds threshold (as per Income Tax rules), the bank may deduct TDS at source.
- Senior citizens may be subject to higher thresholds or special schemes; check latest tax notifications before investing.
- RDs do not provide any deduction under Section 80C (unlike 5-year tax-saving FDs or PPF).
Advantages & Limitations of RD – What Works, What to Watch Out For
Advantages
- Systematic savings – ideal for disciplined monthly depositors.
- Guaranteed returns, independent of markets.
- Low financial entry barrier – you can start with small amounts.
- Safe – regulated by RBI / backed by deposit-insurance schemes.
- Good for medium-term goals (children’s education, vacations, emergency fund).
Limitations / What to Watch Out For
- Interest rates are modest – may not beat inflation significantly over long periods.
- Tax reduces real returns for high-income investors.
- Premature withdrawal comes with penalty – might reduce interest earned.
- Liquidity is limited – funds are locked in until maturity (unless broken early).
- Rate revisions – banks may revise RD rates based on monetary policy, so locking in at good rate matters.
How to Open an RD Account in 2025 (Step-by-Step)
Online (Net Banking / Mobile Banking)
- Login to your bank’s net banking or mobile app.
- Navigate to “Deposits” → “Recurring Deposit.”
- Select monthly deposit amount, tenure, and preferred date for auto-debit.
- Set up standing instructions for monthly auto deposit (helps avoid missed deposits).
- Confirm and activate the RD.
Offline (Branch / Post Office)
- Visit nearest bank branch or post office.
- Fill RD application form; choose RD type, deposit amount and tenure.
- Submit KYC documents (Aadhaar, PAN, address proof, photo as applicable).
- Deposit first installment and obtain receipt or passbook.
Tips to Maximize RD Returns in 2025
- Compare RD rates across banks before deposit — small finance / private banks often offer higher rates.
- Prefer quarterly compounding plans — compounding frequency impacts final returns.
- Automate monthly deposits via standing instructions to avoid missed payments.
- Avoid premature withdrawal — breaking an RD early reduces returns substantially.
- For senior citizens, explicitly opt for senior-citizen RD schemes to get higher rates.
- Keep investment within deposit-insurance limits if safety matters (e.g. DICGC coverage up to ₹5 lakh per bank).
When RD Makes Sense – And When You Should Consider Alternatives
Choose RD if:
- You earn regularly and can set aside monthly savings.
- You want stable, guaranteed returns without market risk.
- Your goals are medium-term (2–5 years) like a vacation, child education, emergency fund.
- You want disciplined savings habit without needing lump-sum upfront.
Consider alternatives if:
- You expect high inflation — inflation may erode RD’s real returns over long term.
- You need higher liquidity or flexibility (e.g. mutual funds, bonds, liquid savings, systematic investment plans).
- You can tolerate some market risk for potentially higher returns (equities, hybrid funds, etc.).
- Your deposit amount is large and spreads across multiple banks — to diversify beyond RD exposure and deposit-insurance limits.
Frequently Asked Questions (FAQs) about Recurring Deposits (RDs) in 2025
1. What is the minimum monthly amount required to start an RD?
Most banks allow RDs starting from ₹100 to ₹500 per month. Post Office RD also has low minimum investment requirements, making RDs accessible for all income groups.
2. Can I change my monthly RD deposit amount after starting the account?
No. In a regular RD, the monthly installment amount remains fixed throughout the tenure. If you want flexibility, banks like ICICI, Kotak, and IDFC FIRST Bank offer flexible or variable RDs where deposits can vary.
3. Is RD interest taxable?
Yes. Interest earned on RDs is fully taxable under “Income from Other Sources.” Banks may deduct TDS if the total interest exceeds the yearly threshold as per tax rules.
4. Can I close my RD before maturity?
Yes, premature closure is allowed, but the bank will deduct a penalty (usually 1%–2%) from the applicable interest rate. Some banks may offer lower interest for early closure periods.
5. Which bank gives the highest RD interest rates in 2025?
Small Finance Banks such as Equitas SFB, AU SFB, Jana SFB, and Suryoday SFB typically offer the highest RD rates in 2025, often above 7.5%–8% depending on tenure.
6. Is RD safe from market fluctuations?
Yes. RD returns are fixed and do not depend on stock market movements. Bank RDs are covered under deposit insurance up to the permissible limit, and Post Office RDs are backed by the Government of India.
7. What happens if I miss an RD installment?
Missing an installment may result in a penalty depending on the bank’s policy. Some banks may also extend the tenure to compensate for the missed deposit. Automating payments via standing instructions avoids this issue.
8. Can I take a loan against my RD balance?
Yes. Most banks allow a loan or overdraft of up to 80%–90% of the RD balance. This helps you meet emergency needs without breaking the RD prematurely.
In 2025, Recurring Deposits remain a cornerstone of safe, disciplined savings in India. For monthly savers, students, salaried individuals, retirees, and conservative investors, RDs offer predictability, safety, and ease of use. While yields may not be very high compared to market-linked instruments, the security and discipline they bring make RDs a valuable tool — especially for short- to medium-term financial goals. Just ensure you pick the right bank, tenure, and deposit amount, and stay aware of tax implications. With the right approach, RD can serve as a stable financial foundation for any investor.
