Question 1

What is the main difference between FD and RD?

Accepted Answer

A Fixed Deposit (FD) requires a one-time lump sum deposit at account opening, earning interest on the full amount throughout the tenure. A Recurring Deposit (RD) allows you to deposit a fixed amount every month from your regular income at the same guaranteed interest rates.

Question 2

How is interest compounded on FDs and RDs in Indian banks?

Accepted Answer

Both FDs and RDs in India follow quarterly compounding as mandated by the Reserve Bank of India (RBI). This means interest is calculated and added to your principal balance every 3 months, resulting in higher effective annual yields.

Question 3

What is the TDS threshold for FD and RD interest?

Accepted Answer

Banks deduct 10% TDS if the total interest earned across all branches exceeds ₹40,000 in a financial year for individuals (₹50,000 for senior citizens aged 60+). You can submit Form 15G (or Form 15H for senior citizens) to avoid TDS if your total income is below the basic tax exemption limit.

Question 4

Are bank deposits safe? What is DICGC insurance?

Accepted Answer

Yes, all scheduled commercial and small finance banks in India are insured under the DICGC scheme (RBI subsidiary). Each depositor is insured up to ₹5,00,000 per bank, covering both principal and accrued interest.

Fixed & Recurring Deposit Hub (FD & RD)