Recurring Deposit (RD) Interest Rates: How Returns Offered By SBI, Post Office Compare

Recurring Deposit (RD), a kind of investment plan, allows customers to save a fixed sum every month and earn an interest income on the same. From state-run State Bank of India (SBI) to post office- all major financial institutions across the country offer the facility of opening an RD account. An investor can choose from a variety of terms - or maturity period to set up an RD account. Recurring deposit interest rates, once determined, do not change during the tenure. On maturity, the depositor is paid a lump-sum amount which includes the periodic investments and the interest income earned on them. 

Recurring Deposit (RD), a kind of investment plan, allows customers to save a fixed sum every month and earn an interest income on the same. From state-run State Bank of India (SBI) to post office- all major financial institutions across the country offer the facility of opening an RD account. An investor can choose from a variety of terms - or maturity period to set up an RD account. Recurring deposit interest rates, once determined, do not change during the tenure. On maturity, the depositor is paid a lump-sum amount which includes the periodic investments and the interest income earned on them. 

Here's a comparison of recurring deposits interest rates, other RD features offered by SBI and post office:

Minimum/Maximum Contribution

In SBI RD account, customers are required to make monthly deposits of minimum of Rs 100 and in multiples of Rs 10. There is no maximum limit on the deposits.

Meanwhile, the minimum amount required for opening a post office recurring deposit account (RD) is Rs 10 per month. There is no maximum limit on investment. 

Maturity period

The minimum period of SBI RD is 12 months while the maximum is 120 months, according to SBI's website- sbi.co.in.

The maturity period of post office RD account, on the other hand, is 5 years. On maturity, a recurring deposit of Rs 10 per month fetches a return of Rs. 725.05 in post office. The post office five-year RD account can be continued for another five years on a year-to-year basis, according to India Post's official website- indiapost.gov.in.

Interest Rates

Interest rates offered on SBI recurring deposits (RDs) are the same as that on fixed deposit (FD) accounts, noted the lender on its website. The following RD interest rates are applicable on deposits below Rs 1 crore, according to the bank's website:

Meanwhile, India Post offers an interest rate of 7.3 per cent per annum on recurring deposit (RD) account, according to India Post's official website. The interest rate on post office RD account is compounded quarterly. 

Penalty charges for non-deposit of monthly installments

SBI imposes the following penalty charges for non-deposit of monthly instalments in case of an RD account: for account of period five years and less - the bank charges Rs 1.50 per Rs 100 per month and for account of period above five years- the lender charges Rs 2 per Rs 100 per month.

In case of post office RD account, if the subsequent deposit is not made up to the prescribed day, a default fee at Rs. 0.05 for every 5 rupee is charged. After four regular defaults, the account is discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made. If in any recurring deposit account, there is a monthly default amount, the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit.