Question 1

How is RD interest calculated in Indian banks?

Accepted Answer

In India, RD interest is compounded quarterly as per Indian banking norms. The formula calculates quarterly compounded interest for each monthly installment from the deposit date until maturity.

Question 2

Can I withdraw my RD before maturity?

Accepted Answer

Yes, banks permit premature withdrawal of Recurring Deposits. However, the interest paid will be based on the rate applicable for the period the deposit remained with the bank, minus a premature withdrawal penalty of 0.5% to 1.0%.

Question 3

Is RD interest subject to TDS?

Accepted Answer

Yes, interest earned on Recurring Deposits is subject to 10% TDS if the total interest earned across all your deposits in a bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens).

Question 4

Can I take a loan against my RD?

Accepted Answer

Yes, most Indian banks offer a loan or overdraft facility of up to 90% of the accumulated deposit value in your RD account at just 1% to 2% above the applicable RD interest rate.

Recurring Deposit (RD) & FD Hub