Amongst the most popular regular investment avenues in India, recurring deposits (RDs) are essentially debt instruments that accept investments at regular intervals and provide capital guarantee to investors. Banks offer RDs with tenures ranging from one to ten years. An RD allows investors to invest a fixed amount every month and build the corpus for short-term needs. Conservative investors who have a regular income stream can look at RDs, but should remember that interest from RDs is taxable. The interest income is added to your taxable income and taxed as per the slab rate applicable to you.
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At present, banks offer interest rates of 6.25-7.25 percent on three-year RDs. Moneycontrol has shortlisted ten such banks. The key parameter for shortlisting these banks is their term deposit holdings. The best rates offered by these banks on three-year recurring deposits (RDs) for residents have been considered. The data is as of March 13, 2024. Bankbazaar has compiled the data.
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Bank of Baroda offers an interest rate of 7.25 percent on RDs with a three-year tenure. If you invest Rs 5,000 every month for three years, you will get Rs 2,01,474 at maturity.
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Axis Bank offers 7.10 percent interest on RDs for a three-year tenor. If you invest Rs 5,000 every month for three years, your corpus would have grown to Rs 2,01,002 at the end of the tenure.
HDFC Bank, Punjab National Bank and ICICI Bank offer interest rate of 7 percent on such RDs. If you invest Rs 5,000 every month for three years, you will get Rs 2,00,688 at maturity.
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Canara Bank offers an interest rate of 6.80 percent on RD with three-year tenure. If you invest Rs 5,000 every month for three years, your corpus will grow to Rs 2,00,060.
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State Bank of India's interest rate on three-year RDs is 6.75 percent. If you invest Rs 5,000 every month for three years, you will get Rs 1,99,899 at maturity.
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Union Bank of India and Bank of India offer interest of 6.5 percent interest on such RDs. Investment of Rs 5,000 every month over three years will grow to Rs 1,99,124 at maturity.
Indian Bank offers an interest rate of 6.25 percent for three-year RDs. A contribution of Rs 5,000 every month would have grown to Rs 1,98,340 at the end of three years.
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The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in recurring deposits of up to Rs 5 lakh.
Hiral Thanawala is a personal finance journalist with over 10 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
