What is the RD interest rate in India in 2025?

RD interest rates in 2025: SBI offers 6.5–7.0% p.a., HDFC Bank 7.0–7.25% p.a., ICICI Bank 7.0–7.25% p.a., and Post Office RD offers 6.7% p.a. Senior citizens typically get an additional 0.25–0.50% over regular rates. Rates vary by tenure and are subject to change.

Is RD better than FD?

RD is better if you want to invest a fixed amount monthly from your salary — it builds savings discipline. FD is better if you have a lump sum to invest, as it typically offers slightly higher rates and more tenure flexibility. Both are equally safe as deposits with scheduled commercial banks are insured up to ₹5 lakh under DICGC.

Can I withdraw RD before maturity?

Yes, premature closure of RD is allowed, but most banks apply a penalty of 0.5–1% reduction on the applicable interest rate. Some banks also have a lock-in of 1–3 months. If you need urgent liquidity, consider taking a loan against your RD (most banks offer up to 90% of RD balance) instead of premature withdrawal.

RD Calculator India – Recurring Deposit Maturity Calculator

RD Details

Monthly Deposit

₹

₹500₹1L

Interest Rate (p.a.)

%

1%12%

Tenure

mo

3 mo120 mo

Goal presets

Maturity Amount

₹0

after 24 months at 6.5% p.a.

Total Deposited

₹0

Interest Earned

₹0

Effective Yield (p.a.)

0%

Return on Deposits

0%

TDS Note

If annual interest exceeds ₹40,000 (₹50K for seniors), TDS at 10% is deducted. Submit Form 15G to avoid TDS.

Investment Breakdown

maturity₹0

Total Deposited

₹0

87%

Interest Earned

₹0

13%

Deposited 87%Interest 13%

Month-by-Month Growth

Cumulative deposits and interest earned over tenure

Deposited

Interest

0

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Schedule

Cumulative deposits, interest and balance by quarter

Period	Total Deposited	Interest Earned	Balance

What is an RD?

A Recurring Deposit (RD) is a savings instrument where you deposit a fixed amount every month for a fixed tenure. At the end of the tenure, you receive the total deposited amount plus the accumulated interest — making it perfect for disciplined saving towards a goal.

RDs use quarterly compounding — interest is calculated every quarter on the outstanding balance and added to the corpus.

RD Maturity Formula (Indian Banks)

M = R × [(1 + i)^n − 1] / (1 − (1+i)^(−1/3))

Where i = rate/400 (quarterly), n = total quarters, R = monthly deposit

RD vs SIP vs FD

RD — Safe monthly savings

Fixed, guaranteed returns. No market risk. Good for short-term goals (1–5 years) like emergency fund, vacation, gadget purchase.

SIP — Market-linked monthly investing

Higher potential returns over 7+ years but with market volatility. Equity SIPs historically outperform RD significantly over long periods.

RD Example Calculations

₹5K/mo · 6.5% · 2 years₹1,29,565

Deposited ₹1,20,000 · Interest ₹9,565

₹10K/mo · 7% · 3 years₹4,03,768

Deposited ₹3,60,000 · Interest ₹43,768

₹25K/mo · 6.7% · 5 years₹17,72,504

Deposited ₹15,00,000 · Interest ₹2,72,504

Current RD Rates in India

SBI6.50% (2yr)

HDFC Bank7.00% (2yr)

Post Office RD6.70% (5yr)

Small Finance BanksUp to 9%

Senior Citizens (extra)+0.25–0.50%

* Indicative rates. Verify with your bank before opening.

Frequently Asked Questions

Common questions about Recurring Deposits

How is RD interest calculated?

Indian banks use quarterly compounding for RDs. Each monthly installment is treated as a separate deposit earning compound interest from its month of deposit. The formula: M = R × [(1+i)^n − 1] / (1−(1+i)^(−1/3)), where i = rate/400, n = quarters. BharatCalc uses the installment-by-installment FV method for maximum accuracy.

What happens if I miss an RD installment?

If you miss an installment, banks charge a penalty of ₹1 to ₹2 per ₹100 per month on the missed amount. If you miss more than a certain number (varies by bank, usually 3–4), the RD account may be marked irregular and could be closed prematurely. Set up an auto-debit to avoid missing payments.

Is RD interest taxable?

Yes. RD interest is fully taxable at your income slab rate as "Income from Other Sources." TDS at 10% is deducted if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Unlike FD where interest is credited annually, RD interest accrues monthly but is taxable in the year it accrues, not just at maturity.

Can I break an RD prematurely?

Yes, premature closure is allowed at most banks with a penalty of 0.5–1% on the applicable interest rate. You receive interest for the period actually completed, minus the penalty. Post Office RDs can be closed after 3 years (out of 5). Avoid premature closure to earn full interest.

RD vs SIP — which is better?

For short-term goals (<3 years) and capital safety: RD wins with guaranteed returns. For long-term wealth (7+ years): equity SIP wins with historical returns of 12–15% vs RD's 6.5–7%. Both involve monthly discipline, but SIP has market risk. Use RD for your emergency fund and near-term goals; SIP for long-term wealth.

What is the minimum RD amount in India?

Most banks allow RDs starting from ₹100/month. Post Office RD minimum is ₹100/month with no upper limit. SBI minimum is ₹100/month. Online RD accounts can be opened instantly through net banking or mobile apps of most banks. There is no maximum limit on RD deposits.

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