A Recurring deposit is a unique term deposit or investment tool that is proposed by Indian banks. People who used to do investment get a decent return or can make a deposit. The recurring deposit allows you to receive a secured interest in the significance of investment within a determined term. At the end of the session, RD provides the total of investment account and profit. It offers the customers a flexible way to invest their money with safety and ease. Account holders get the option of choosing the duration of deposit and amount to be invested frequently. You can open the account with compatibility and an interest rate of 6-7%, having a fixed tenure in Indian banks. 

Features of Recurring Deposit 

These are the following features of an RD account.

• Security: The Schemes, that are provides by the recurring account focus on the saving habits of people. Unlike mutual funds, RD gives guaranteed security to the working capital.
• To credit the monthly recurring fund from the bank, the recurring deposit can be transferred by the instructions that the account user provides to the bank.
• Standard instructions: At the time of opening, the rule of prematurity comes under the instructions. Users can’t deposit the amount before the period of maturity. If he does this, there are rules and regulations regarding premature withdrawals.
• Rs. 10 is the smallest amount you can deposit from one bank account to another account. With this, the user gets a three-time period as short-term, medium-term, or long-term for investment.
• A Loan against RD: The recurring deposit provides an extra advantage of taking the loan. Bank can give 80-90% of the deposit amount in the form of a loan. The amount of loan deviates from bank to bank as it can be 90% in PNB or 93% in ICICI. It is known as a quick loan, which can be available by an interest rate of 1-2% more than your bank account.
• Time limit: In the recurring deposit, the minimum maturity period is six months and the maximum time is up to ten years. If the user withdraws the money before the maturity period, then only the capital will be provided without any interest.
• Interest rate: One of the benefits of recurring accounts is that it provides an equal or high-interest rate to the account holders. The interest rates of RD are between 5.75-8.05%, with a tenure of zero to ten years.
• RD for senior citizens: If we talk about the senior citizens, then they usually get a higher interest rate than others. Bank provides an additional interest rate of 0.5% to 0.75% than normal RD account holders. This facility is available for both Indians and NRIs. But, at the time of account opening, your age must be above 60 years. 
• Tax exemption: According to Indiashoppers, there was no tax exemption before the 1st of June 2015. But, after that RD started to give an exemption in the form of TDS as per the tax laws. However, the rule of tax exemption won’t apply here if the interest revenue gained doesn’t exceed Rs. 10,000 in a business year.

Fixed Deposit vs. Recurring Deposit

When it comes to investing money, many investors get confused between the fixed deposit and recurring deposit. The demonstration of both these is the fixed returns with the security of capital. Let’s see how both differ from each other.

• Specialties: These two works of the same concept as you must invest the amount which can be long-last within a period of maturity. At the end of the maturity period, you get the capital amount with the accumulated interest. In both products, once you have invested the capital, then it will be the same throughout the maturity period. To increase the interest of investors, the interest rate has increased on both deposits.
• Taxability: If we talk about the tax exemption, these two have no difference. The amount, you receive from the capital will be added to your income, and then tax will be applied on it. However, if your interest revenue exceeds 10,000, then FD will exempt some of your income as TDS. But, there no such a rule in recurring deposit.
•  Investment time: In terms of return, FD is better than RD, but it’s not possible to meet all the requirements with just one product. You can invest a defined amount from the income as a recurring deposit when you don’t have a considerable amount to pay. From the perspective of regular savings, RD is the better option.

Eligibility Criteria for Recurring Deposit

• Any individual or minor has the option to open an RD account after the age of ten years, having proof of their identity. 
• There’s a provision that children who are below the age of ten year, can be applied for an account under the guardianship. You can see latest result from fresh hiring.
• A corporate, commercial, or government organization can apply for the recurring deposit account.