RD Calculator

What is RD in Bank? Recurring Deposit Meaning & How It Works

A recurring deposit is a term deposit you build up in instalments instead of opening with a lump sum. You commit to paying a fixed amount every month for a fixed tenure, the bank fixes the interest rate on the day you open the account, and that rate applies to every instalment for the whole term — including instalments you have not paid yet. This is the feature that defines the product. A later cut in recurring deposit interest rates cannot touch an account that is already running, and a later rise will not benefit it either.

An RD account is what you open when you have a monthly surplus rather than a pile of savings. The money leaves your savings account on a set date by standing instruction, which is the practical reason people use it: the saving happens whether or not you remember to do it. Tenures generally run from six months to ten years, and the minimum instalment at most banks is small enough — often ₹100 at the Post Office and ₹500 at commercial banks — that the barrier to opening one is close to zero.

You will see this tool called a recurring calculator, an RD maturity calculator or simply an RD calculator. All three names describe the same arithmetic: the quarterly-compounding summation set out further down this page, applied to each instalment separately.

What Is an RD Account, and Who Should Open One?

Opening an RD commits you to a monthly figure you must sustain for the full tenure, so the instalment should be set against the month you earn least, not the month you earn most. It suits salaried savers with a predictable surplus, anyone building a fund for a dated expense, and savers who want the discipline of an automatic debit. It suits you poorly if your income is irregular — a flexible product such as ICICI's iWish, which carries no penalty for a missed payment, fits that case better than a conventional deposit.

How Recurring Deposit Works: The Month-by-Month Mechanics

The mechanic that surprises most people is that a recurring deposit is not one deposit. Each monthly instalment is treated as its own small term deposit, opened on the day it is paid and maturing on the day the whole account matures. Your first instalment therefore earns interest for the entire tenure; your last one earns interest for a single month. That is why an RD returns less than a fixed deposit of the same total amount at the same rate — the average rupee in an RD has been invested for roughly half as long.

What Is Recurring Deposit Interest, and When Is It Credited?

The interest is the difference between what you pay in and what the bank hands back at maturity. It accrues continuously and is compounded into the balance every quarter, but on a standard cumulative RD it is not paid out along the way — you see it only on the maturity date. That distinction matters for two reasons. It is why the year-by-year table above shows a growing balance rather than a series of payouts, and it is why the interest is taxable in each year it accrues rather than all at once in the year you finally receive it. Banks set RD interest rates by tenure slab, so a 24-month deposit and a 30-month deposit at the same bank on the same day can carry visibly different rates.

What DICGC Cover Actually Protects

Deposits with commercial banks, small finance banks and co-operative banks are insured by the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the RBI, up to ₹5 lakh per depositor per bank. Two points are routinely misread. The limit covers principal and accrued interest combined, not principal alone. And it applies per bank, not per account — your RD, savings balance and fixed deposits at the same bank share one ₹5 lakh ceiling, while the same money split across two banks is covered twice. Post Office deposits sit outside this scheme entirely; they carry a direct Government of India guarantee with no upper limit, which is a stronger backing rather than a weaker one.

How to Calculate RD Interest: Quarterly Compounding Formula & Mathematics

Indian banks and the Post Office compound recurring deposit interest quarterly, in line with RBI convention. Because each instalment has a different amount of time left to run, the honest way to state the calculation is as a sum over instalments rather than as a single growth factor:

• •P — the monthly instalment, identical for every term of the sum.
• •r — the annual interest rate as a decimal, so 6.5% enters the formula as 0.065 and r/4 is the quarterly rate of 0.01625.
• •t_i — the time in years that instalment i still has to run, so 4 × t_i is the number of quarters it compounds for. For a 60-month deposit the first instalment has t = 5 and compounds for 20 quarters; the last has t = 1/12 and compounds for one third of a quarter.

Because the exponents fall in equal steps, that sum collapses into a closed form which is often quoted as the RD formula:

Here n is the tenure in years. The two expressions are algebraically identical, and both return ₹3,54,954 on the worked example below — the calculator at the top of this page evaluates the summation directly, instalment by instalment.

Worked Example: ₹5,000 a Month at 6.5% for 5 Years

Take a 60-month deposit of ₹5,000 a month at 6.5% a year. The quarterly rate is 0.065 / 4 = 0.01625. Instalment one compounds for 20 full quarters, giving ₹5,000 × 1.01625²⁰ = ₹6,902.10. Every later instalment compounds for one third of a quarter less than the one before it:

Rows four through fifty-eight follow the same pattern and are omitted for space. Adding all sixty terms gives ₹3,54,954.10, which the bank rounds to ₹3,54,954. Against ₹3,00,000 paid in, the interest earned is ₹54,954. Note what that implies: ₹54,954 on ₹3,00,000 is about 18.3% in total, not 6.5% × 5 = 32.5%, precisely because the later instalments barely had time to earn anything. Judging an RD by multiplying the rate by the tenure will overstate the return every time.

RD vs FD vs SIP: Which Regular Savings Route is Best?

These three get compared constantly, but only two of them are the same kind of instrument. An RD and an FD are both deposits with a contractually fixed return; a SIP is a schedule for buying mutual fund units and carries no promised outcome at all. The useful question is not which pays more, but which risk you are being paid to take.

The practical reading: use an RD for money you will certainly need on a known date — a fee instalment, an insurance premium, a deposit on a rented flat — where losing 10% would wreck the plan. Use a fixed deposit instead if the money is already in hand, since every rupee then earns from day one. Use a SIP for goals far enough away that a bad year has time to recover.

Framed as RD vs SIP, the choice is simply between a number you are promised and a number you are hoping for. An RD tells you today what you will hold on the maturity date; a SIP cannot, and in exchange offers a higher expected return over long horizons. Pick on whether the goal tolerates a shortfall, not on which historically paid more.

Regarding which bank is best for an RD: the deposit contract is close to identical everywhere, so the answer reduces to the rate on your specific tenure on the day you open the account. Small finance banks typically quote the highest rates and carry the same ₹5 lakh DICGC cover, which makes them competitive so long as you stay inside that limit. Large public and private banks quote less but are easier to operate. Post Office suits a five-year horizon because of the sovereign guarantee. Compare the rate for your exact tenure — not the headline rate, which usually belongs to a tenure you did not pick.

Popular RD Amount Benchmarks: ₹1,000, ₹2,000 & ₹5,000 per Month

These are the three instalments people most often start with, shown at one, three and five years. The 6.5% and 7.0% columns are illustrative benchmarks chosen because most published RD interest rates sit in that band — they are not a quote from any bank. Put your own rate into the calculator above for a figure you can rely on.

Read down the ₹1,000 column and the effect of tenure is stark: one year turns ₹12,000 into ₹12,429, while five years turns ₹60,000 into ₹70,991. The rate did not change — the time each instalment spends compounding did. Half a percentage point matters far less than an extra two years.

Tax Rules on Recurring Deposits: TDS, Form 15G/15H & Section 80TTA

Interest on a recurring deposit is fully taxable at your slab rate under "Income from Other Sources". It is taxable as it accrues each year, not only in the year the deposit matures, which is a common and expensive misunderstanding — the whole gain landing in one assessment year can push you into a higher bracket.

Banks deduct TDS under Section 194A once your total interest from all deposits at that bank crosses ₹50,000 in a financial year, or ₹1,00,000 if you are a senior citizen. The rate is 10% where the bank has your PAN and 20% where it does not, so keeping PAN updated is worth real money. TDS is not an extra tax and it is not the final tax: it is an advance credit you set against your total liability when you file, and if your slab rate is higher than 10% you will still owe the balance.

If your total income for the year falls below the taxable limit, you can stop the deduction at source by filing Form 15G (under 60) or Form 15H (60 and over) with each bank at the start of the financial year. These are declarations of expected income, not exemptions — filing one when your income is in fact taxable is a false declaration, and the interest remains reportable either way.

On Section 80TTA, the honest answer runs against what is widely assumed: RD interest does not qualify. That deduction of up to ₹10,000 covers interest on savings accounts only and expressly excludes time deposits, which is what a recurring deposit is. Senior citizens are treated differently — Section 80TTB allows up to ₹50,000 and does cover recurring and fixed deposit interest. Both deductions belong to the old tax regime; neither is available if you are taxed under the new regime, which now applies by default unless you opt out.

Premature Withdrawal and Missed Instalments

Closing an RD early does not simply forfeit some interest — it re-prices the deposit. The bank recomputes your return at the rate that applied to the period the money actually stayed, then subtracts a penalty of typically 0.5% to 1.0% from that rate. Break a five-year RD after two years and you are paid the two-year rate less the penalty, not the five-year rate you contracted for. Missing instalments is a separate matter: banks charge a small default fee per month of delay, and an account left unpaid long enough — commonly six consecutive months — can be closed by the bank and settled on the instalments actually received.

Taking a Loan Against Your RD

Most banks lend against an accumulated RD balance once the account has run for a qualifying period, commonly up to 90% of the balance, charging one to two percentage points above your deposit rate. This is almost always the better move than breaking the deposit for a short-term need: the RD keeps compounding at its contracted rate and you avoid the penalty re-pricing described above. Compare the spread on the loan against what early closure would cost you before deciding.

Explore Bank-Specific & Post Office RD Calculators

The mathematics is identical at every institution — what changes is the rate on your tenure, the minimum instalment, and how missed payments and early closure are handled. These pages cover the rules specific to each:

• Post Office RD CalculatorThe 5-year National Savings Recurring Deposit, sovereign-backed and priced off G-Sec yields rather than a bank treasury.
• SBI RD CalculatorTenures from 12 to 120 months in three-month steps, with instalments collected by standing instruction.
• HDFC Bank RD CalculatorTenures from six months upward, the shortest entry point among the large private banks.
• ICICI Bank RD CalculatorCovers the conventional fixed-instalment RD alongside the penalty-free iWish flexible deposit.
• PNB RD CalculatorThe Sugam and Dhan Vridhi family, including partial withdrawal against an accumulated balance.
• Union Bank RD CalculatorOpened through the Vyom app, across the network Union Bank absorbed from Andhra Bank and Corporation Bank.
• Canara Bank RD CalculatorCanara Dhanvarsha lets the monthly instalment vary — rare among public sector banks.
• Axis Bank RD CalculatorA ₹500 minimum instalment in ₹100 steps, opened end to end inside the Axis Mobile app.
• BOB RD CalculatorRun through bob World, across the network merged from Vijaya Bank and Dena Bank in 2019.
• BOI RD CalculatorThe Star Recurring Deposit range, on a branch network still weighted to rural and semi-urban India.
• IOB RD CalculatorThe Regular RD and Vardhan schemes, with an overseas footprint dating to the bank’s founding in 1937.
• Indian Bank RD CalculatorThe IB range on the IndOASIS app, across the network merged with Allahabad Bank in 2020.
• UCO Bank RD CalculatorKolkata-founded in 1943, with the densest eastern India network of any comparable public sector bank.
• IDBI Bank RD CalculatorA development finance institution turned bank, reclassified private sector after LIC took control in 2019.
• Kotak RD CalculatorThe first Indian NBFC to convert into a bank, with recurring deposits fundable from an 811 account.

For a lump sum rather than a monthly commitment, the fixed deposit calculator applies the same quarterly compounding to a single deposit, and the PPF calculator covers the tax-free 15-year alternative for money you can genuinely lock away.