Recurring Deposit FAQ

Your recurring deposit questions, answered.

What is a recurring deposit (RD)?
A recurring deposit lets you invest a fixed amount every month for a set tenure (commonly 6 months to 10 years) at a fixed interest rate, so it suits regular savers who don't have a lump sum. As of 14 Nov 2026, the highest general RD rate we track is 8.50% at The A.P. Vardhaman (Mahila) Co-operative Urban Bank Ltd.. You can compare the best RD rates here.
How is RD interest calculated?

RD interest is compounded quarterly, like an FD, but each monthly instalment earns interest only from the month it is deposited, so earlier instalments earn more than later ones. The maturity value is the sum of each instalment grown at the RD rate for its remaining tenure.

Is an RD rate the same as the FD rate?

Banks usually set RD rates equal or very close to their FD rates for the same tenure, for the same depositor category. Because money goes in gradually rather than as a lump sum, the effective return on an RD is lower than an FD of the same headline rate and tenure.

Is RD interest taxable?

Yes. RD interest is taxed at your slab rate, and the same TDS rules as FDs apply: TDS at 10% (20% without PAN) once interest from the bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). Form 15G/15H can prevent TDS if your income is below the taxable limit.

What happens if I miss an RD instalment?

Most banks charge a small late fee per missed instalment and may close the RD if several instalments in a row are missed. The exact penalty and grace period vary by bank, so check the scheme terms.

Informational only. Always confirm the current rate and terms on the bank's official website before investing. See how we compile and verify rates in our methodology.