Recurring Deposit Rates | These banks offer up to 7.35% interest for 5-year tenor
Conservative investors who have a regular income stream can prefer investing in recurring deposits. Investment in RDs is taxable. Neither the money invested nor the interest earned is exempt, and both are taxed as per the tax slab.
Recurring deposits (RDs) are debt instruments that provide capital guarantee to investors. Banks offer RDs for tenors of one to 10 years. It allows investors to invest a fixed amount every month and build the corpus for short-term needs. It works just like a mutual fund's systematic investment plan. Investing in RDs brings in discipline. However, it also necessitates that you have the required funds to invest every month. Conservative investors who have a regular income stream can prefer investing in RDs. Remember, investment in RDs is taxable. Neither the money invested nor the interest earned is exempt, and both are taxed as per the tax slab.
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Several banks have raised interest rates on RDs for 5-year tenor after three consecutive repo rate hikes by the Reserve Bank of India (RBI). The cumulative rate hike is 140 basis points (one basis point is one-hundredth of a percentage point) between May and August to curb rising inflation. Small finance banks lead with the highest interest rates, followed by a foreign bank and small private banks. The average interest rates of the top 10 banks is 6.9 percent for RDs with 5-year tenor, according to data compiled by BankBazaar. Here are the top 10 banks offering the interest rates on RDs for 5-year tenor.
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Jana Small Finance Bank offers 7.35 percent interest on RDs for a 5-year tenor. Among small finance banks, this bank offers the best interest rates. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.63 lakh.
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Ujjivan Small Finance Bank offers 7.2 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.62 lakh.
Deutsche Bank is offering the best interest rates among foreign banks. It offers 7 percent interest on 5-year RD. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.60 lakh.
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Fincare Small Finance Bank offers 7 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.60 lakh.
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AU Small Finance Bank offers 6.9 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.59 lakh.
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IndusInd Bank and Yes Bank are offering the best interest rates among private banks. They offer 6.75 percent interest on RDs for a 5-year tenor. Suryoday Small Finance Bank also offers 6.75 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.58 lakh.
RBL Bank offers 6.55 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.56 lakh.
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IDFC First Bank offers 6.5 percent interest on RDs for a 5-year tenor. If you invest Rs 5,000 every month for 5 years, at the end of the tenor you will get Rs 3.55 lakh.
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Small Finance Banks and smaller private banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in recurring deposits of up to Rs 5 lakh.
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The data on RDs is as of September 21, 2022, as given on bank websites. We have considered the interest rates for a 5-year tenor. Banks for which RD rates are not shown on the website are not considered for compilation by Bankbazaar.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
