Recurring Deposit (RD) Calculator
This RD calculator projects the maturity value of a Recurring Deposit at any Indian bank. Enter your monthly deposit amount, the interest rate offered, and the tenure (typically 6 months to 10 years), and the calculator shows your maturity amount, total amount deposited, and total interest earned. The math uses quarterly compounding — the standard for RD interest calculation across all Indian banks.
RDs work well for one specific situation: you don't have a lumpsum to invest in an FD but you can save consistently from your monthly salary. The forced-saving discipline of an RD beats the alternative of "I'll save what's left at month-end" — which usually leaves nothing. Senior citizens get a 0.50% bonus rate on most RDs, the same as on FDs. For comparing RD versus alternative monthly-savings products like equity SIPs, the relevant question is risk tolerance and time horizon, not just headline returns.
How this calculator works
What is an RD?
A Recurring Deposit is a savings product where you deposit a fixed amount every month for a chosen tenure. Each monthly deposit earns interest from its date of deposit until maturity, with quarterly compounding. The combined principal plus interest is paid as a lumpsum at maturity. The product was originally designed for salaried workers who couldn't spare a lumpsum but could commit to a monthly contribution.
Most Indian banks offer RDs starting at ₹100-500 per month with no upper limit. Tenures range from 6 months to 10 years. Premature withdrawal is allowed at most banks but with a penalty (typically 1% lower than the contracted rate). Once started, you can't change the monthly amount — to increase, you'd open a second RD. To decrease, you'd break the existing one and open a smaller one.
The compounding math
RD interest uses the same quarterly compounding as FDs, but the formula is more complex because each monthly instalment has a different time period to accrue interest. The first deposit earns interest for the full tenure; the second for one month less; and so on, with the final deposit earning interest for just the remaining portion of the last quarter.
The general formula:
Maturity = P × [((1 + r/4)^(4n) − 1) / (1 − (1 + r/4)^(−1/3))]
Where: P = monthly deposit, r = annual interest rate (decimal), n = tenure in years
The formula handles the staggered nature of contributions. For practical use, you don't need to compute this manually — the calculator does it. What's useful to understand is that the longer the tenure, the more dramatically compounding takes hold. A 5-year RD doesn't earn 5/3 times what a 3-year RD earns; it earns somewhat more than that because of the compound effect on accumulated interest.
Current RD rates — April 2026
| Bank | General Citizen | Senior Citizen |
|---|---|---|
| State Bank of India (SBI) | 5.50% – 6.40% | 6.00% – 6.90% |
| HDFC Bank | 4.75% – 6.50% | 5.25% – 7.00% |
| ICICI Bank | 4.75% – 6.50% | 5.25% – 7.00% |
| Punjab National Bank | 5.00% – 6.55% | 5.50% – 7.05% |
| Post Office RD | 6.70% (currently) | 6.70% (no senior citizen bonus) |
| Small finance banks | 6.00% – 8.00% | 6.50% – 8.50% |
Post Office RD is interesting: the 6.70% rate is higher than most public sector banks, and the deposit is fully government-backed. It's a strong choice for risk-averse savers, though the 5-year tenure is fixed (you can't pick 1 or 3 years). Small finance banks offer the highest rates but carry slightly higher risk; deposit insurance up to ₹5 lakh per bank still applies.
Tax on RD interest
Interest earned on RDs is fully taxable as Income from Other Sources at your slab rate, in the year it accrues. Banks deduct TDS on RD interest under Section 194A:
- General citizens: 10% TDS if total interest from one bank exceeds ₹40,000 per year
- Senior citizens (60+): 10% TDS if interest exceeds ₹50,000 per year
- No PAN: 20% TDS regardless of amount
To avoid TDS if your total income is below the basic exemption limit, submit Form 15G (general) or Form 15H (senior) at the start of each financial year at every bank where you have RDs.
RD vs SIP
For monthly savers with a 5+ year horizon, equity SIP historically delivers significantly higher returns than RD — long-term equity returns of 11-13% versus RD returns of 6-7%. The trade-off is volatility. RD principal and interest are guaranteed; equity SIP can drop 30-40% in a bad year before recovering.
The honest answer for most people: do both. Use RD for short-term goals (1-3 years) where you can't risk the principal — emergency fund, planned car purchase, vacation savings, child's school fees, wedding fund. Use SIP for long-term goals (5+ years) where you can ride out market cycles — retirement, child's college fund 15 years out, wealth building. The horizon and risk tolerance determine the choice, not headline returns.
RD vs PPF for monthly savers
PPF beats RD for taxable savers. PPF earns 7.1% completely tax-free under EEE status. RD earns 6-7% taxed at slab rate — a 30% taxpayer's effective post-tax return is 4.5%. PPF wins decisively. RD has flexibility advantages: shorter tenure, premature withdrawal possible, no annual contribution cap. PPF is locked in for 15 years with strict withdrawal rules. For a 30%-slab taxpayer building a 5-year fund, prioritise PPF up to the ₹1.5 lakh annual limit, then add RD for any additional savings beyond that.
Worked example
₹5,000 monthly RD for 5 years at 6.5% (general citizen):
- Total deposited: ₹3,00,000 over 60 months
- Maturity value: ₹3,55,420
- Interest earned: ₹55,420
- Effective annualised return: ~6.6% (slightly above the headline due to compounding)
- If in 30% slab: post-tax return ~4.6%; PPF would have delivered 7.1% tax-free
₹10,000 monthly RD for 3 years at 7.05% (senior citizen at SBI):
- Total deposited: ₹3,60,000 over 36 months
- Maturity value: ₹4,01,680
- Interest earned: ₹41,680
- TDS will apply if interest from this bank crosses ₹50,000 in a year — for this RD, annual interest is ~₹14,000-15,000, well below threshold
₹2,000 monthly Post Office RD for 5 years at 6.70%:
- Total deposited: ₹1,20,000 over 60 months
- Maturity value: ₹1,42,732
- Interest earned: ₹22,732
- Backed by sovereign guarantee, no TDS for Post Office RD interest below ₹40,000
Frequently asked questions
Is RD better than FD?
It depends on your starting cash position. If you have a ₹1 lakh lumpsum sitting in your savings account, an FD beats an RD because the entire amount earns interest from day one — RD instalments earn interest only from their respective deposit dates. The FD on ₹1.2 lakh for 1 year at 6.5% earns ~₹7,800. An RD of ₹10,000 monthly for 12 months at the same rate earns only ~₹4,400. But if you don't have the lumpsum and have to save monthly anyway, the RD beats the alternative of saving in a 3% savings account.
Can I miss an RD instalment?
Yes, but with a penalty at most banks. Missing 6 consecutive instalments typically leads to the RD being closed prematurely with the prevailing premature-closure rate (1% lower than contracted) applied retroactively. Single missed instalments usually attract a small penalty (₹10-20) that's deducted at maturity. Set up a standing instruction or auto-debit from your savings account to avoid this entirely. Most banks now offer SI/auto-debit at no cost, and it removes the discipline burden.
What's the maximum amount I can put into an RD?
There's no upper limit, unlike PPF (₹1.5 lakh annual cap). You can run multiple RDs simultaneously at one bank or across banks. The practical cap is what your monthly cash flow supports. RDs are most popular at amounts of ₹500 to ₹25,000 per month — beyond that, lumpsum FDs become more common as the cash builds up.
Is the Post Office RD safer than bank RD?
Slightly. Post Office Recurring Deposits carry the sovereign guarantee of the Government of India — there's no scenario in which the government defaults on the principal. Bank deposits are insured by DICGC up to ₹5 lakh per bank, but amounts above that depend on the bank's solvency. For amounts above ₹5 lakh, splitting between Post Office RD and a major public-sector bank is a sensible risk-management strategy. Below ₹5 lakh per bank, modern public-sector and large private bank deposits carry similar effective safety as Post Office.
Is RD interest taxable in the new tax regime?
Yes. Interest from RDs is taxable as Income from Other Sources at your slab rate under both the old and new tax regimes. There's no tax-saving variant of RD comparable to ELSS for SIPs or tax-saver FDs. If you're looking for tax efficiency on monthly savings, PPF (7.1% tax-free, EEE status) is significantly better. RD makes sense when you need flexibility, want shorter tenure, or have already maxed out PPF.
What happens if I close my RD early?
Most banks impose a 1% interest rate penalty — you receive interest at 1% lower than the contracted rate, applied to all the months the RD ran. So a 5-year RD at 6.5% closed after 2 years effectively earns 5.5% for those 2 years. Some banks also have minimum-period restrictions (typically 3 months) before any withdrawal is allowed. Post Office RD allows partial withdrawal of up to 50% of balance after one year — useful flexibility not available at most banks.
Can NRIs open RD accounts?
Yes, in two flavours. NRE (Non-Resident External) RDs accept deposits in foreign currency converted to INR; the entire principal and interest are repatriable, and interest is tax-free in India. NRO (Non-Resident Ordinary) RDs are for the rupee earnings of NRIs from Indian sources (rent, dividends, business profits); interest is taxable at 30% TDS, and repatriation is limited to USD 1 million per year. NRE RD is the better choice for NRIs sending earned foreign income back to India.
How does small finance bank RD compare to mainstream banks?
Small finance banks (Suryoday, AU, Equitas, Jana, Ujjivan, Utkarsh, North East SFB) offer notably higher RD rates — often 1-2% above SBI/HDFC/ICICI. They're RBI-licensed scheduled commercial banks and carry the same DICGC ₹5 lakh deposit insurance. The trade-off: they have smaller balance sheets and more concentrated lending exposures. For amounts within ₹5 lakh per bank, SFB RDs are reasonable. For larger amounts, split across an SFB and a mainstream bank for risk balance.
Can I get a loan against my RD?
Yes at most banks, typically up to 75-90% of the RD balance at any given point. The interest rate on the loan is usually 1-2% above the RD rate. The RD continues earning interest, the loan is secured against it. This is much cheaper than a personal loan (10.5-18%) and can be sanctioned within hours since the bank already holds your deposit as collateral. Useful for short-term liquidity without breaking the RD prematurely.
Should I do RD or invest in mutual fund SIP?
Different products for different goals. RD: capital fully protected, returns 6-7% taxable, suited for goals 1-3 years away where you cannot risk principal. SIP in equity: market risk, historical returns 11-13% over long periods, suited for goals 5+ years away. Hybrid SIPs in conservative debt funds offer something in between but lost their tax advantage from FY 2023-24. Most balanced savers run both: RD for short-term emergency fund and near-term planned expenses, equity SIP for retirement and long-term wealth. The RD-versus-SIP debate is the wrong frame; both have a place in a complete savings plan.