Published on July 05, 2026 • Last updated July 05, 2026
A Recurring Deposit (RD) is a special term deposit offered by banks which helps people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at rates applicable to Fixed Deposits.
RD allows disciplined savings monthly for a fixed tenure (usually 6 months to 10 years). Interest compounding is quarterly, similar to Fixed Deposits, and the total maturity amount is paid at the end of the term. RDs are ideal for individuals who want to save a portion of their monthly salary systematically with zero market risk.
Banks may charge a nominal penalty for delayed payments. If multiple consecutive installments are missed, the bank might close the RD account and return the principal with reduced interest.
Yes, TDS rules for RDs are identical to those of FDs. If interest income across all term deposits in a bank exceeds the tax threshold (e.g. ₹40,000 for individuals), TDS is deducted at 10%.
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