Recurring deposit interest rates: Small finance banks offer up to 8% on RDs

High tenure RDs, between five and 10 years, have lower rates compared to other tenures for many small finance banks.

While most investors prefer small finance banks for their high fixed deposit interest rates, they are unaware that these banks also offer the highest interest rates on recurring deposits.

Recurring deposits are more flexible as they allow fixed monthly investment compared to the lump sum investment required for a fixed deposit.

Most small finance banks offer the highest rate on an RD of 36 months. Utkarsh Small Finance Bank offers the highest rate of 8 percent on an RD of 24-36 months.

For many small finance banks, high tenure RDs, between five and 10 years, have lower rates compared to other tenures. The bank offers 7.25 percent rates for other tenures, 12, 15, 18, 21, and 24 months. The same rates are for RDs above three years and up to 10 years.

Jana Small Finance Bank and Suryoday Small Finance Bank offer their highest rate on RD for a tenure of 36-60 months and five years, respectively.

North East Small Finance Bank offers its highest rate of 7.50 percent on RD of two years. Other small finance banks offer an interest rate of 6.5 percent and 7 percent on their RDs of various tenures.

Do keep a few things in mind when opening an RD with small finance banks.

- With a 1 percent penalty, all banks allow premature withdrawal.

- To open an RD account, you will need to sign up for a savings account.

- For most small finance banks, the minimum tenure of RD is six months and the maximum is 10 years. The minimum investment amount is Rs 100.

However, there are minor variations in terms and conditions for some small finance banks. AU Small Finance Bank on its website said: "if frequent defaults (non-payments) are observed in monthly instalments, and three instalments fall in debts, the bank reserves the right to close the RD account".

Equitas Small Finance has a mandatory minimum tenure of 12 months and a minimum investment of Rs 1,000, while Fincare Small Finance Bank does not offer higher rates for senior citizens.