✍Reviewed by CA Ramesh Iyer, CFP
A Recurring Deposit (RD) lets you invest a fixed amount every month and earn guaranteed interest — making it ideal for disciplined, risk-free savings. Indian banks and the Post Office compound RD interest quarterly, which our calculator replicates exactly.
RD rates in India in 2026 range from 6.5% to 7.5% p.a. for regular depositors, with an additional 0.25%–0.50% for senior citizens. Unlike FDs, there is no TDS for interest below ₹40,000/year (₹50,000 for senior citizens).
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RD interest is compounded quarterly in Indian banks.
Maturity is calculated by simulating monthly deposits with quarterly compounding at: r = Annual Rate ÷ 400 per quarter.
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Step-by-Step
Investing ₹5,000/month for 12 months at 7% p.a. (quarterly compounding) gives a maturity of ₹62,302 — earning ₹2,302 in interest.
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| Bank / Institution | General Rate | Senior Citizen Rate | Popular Tenure |
|---|---|---|---|
| SBI | 6.80%–7.00% | 7.30%–7.50% | 1–3 years |
| HDFC Bank | 7.00%–7.25% | 7.50%–7.75% | 1–5 years |
| ICICI Bank | 6.90%–7.20% | 7.40%–7.70% | 1–5 years |
| Post Office RD | 6.70% | 6.70% | 5 years |
| Axis Bank | 7.00%–7.25% | 7.50%–7.75% | 1–5 years |
Rates are indicative for 2026 and subject to change. Verify with your bank before opening.
| Feature | RD | SIP (Equity MF) | FD |
|---|---|---|---|
| Returns | 6.5–7.5% (fixed) | 10–15% (market-linked) | 6.5–7.5% (fixed) |
| Risk | Zero | Moderate–High | Zero |
| Liquidity | Penalty for early exit | Can redeem anytime (ELSS: 3-yr lock) | Penalty for premature withdrawal |
| Tax on Interest | Taxable at slab rate | LTCG 10% after ₹1L (equity) | TDS if interest > ₹40K/year |
| Best For | Short-term goals, emergency fund | Long-term wealth creation (5+ yrs) | Lump sum parking |
Indian banks and the Post Office calculate RD interest with quarterly compounding. Each month's deposit earns interest from the deposit date to maturity. The formula applies quarterly interest on the accumulated balance, not simple interest. Our calculator simulates this exactly month by month.
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