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Calculate Recurring Deposit maturity amount and returns
A Recurring Deposit (RD) is a bank product where you commit to depositing a fixed amount every month for a fixed tenure, and the bank pays interest on each installment from the date it's deposited. The maturity amount is the sum of all deposits plus the accumulated interest.
Banks calculate RD interest on a quarterly compounding basis, even though you deposit monthly. This is specified under the RBI's interest rate guidelines for deposits. The effective yield is slightly higher than the nominal rate because of compounding within the year.
Minimum tenure at most banks is 6 months, maximum is typically 10 years. The minimum monthly installment is usually ₹100 at public sector banks. There's no upper limit — you could RD ₹5 lakh a month if you wanted, though at that point you should question whether an RD is the right instrument.
Banks use this formula to calculate RD maturity value:
M = R × [(1 + i)ⁿ − 1] / (1 − (1 + i)^(−1/3))Where M = maturity value, R = monthly installment, i = quarterly rate (annual rate ÷ 4 ÷ 100), n = number of quarters.
Simpler approximation for quick mental math: treat it like a lump-sum FD on half the total deposit for the full tenure. For a ₹10,000/month RD at 7% for 2 years, total deposit = ₹2.4 lakh. Approximate interest ≈ interest on ₹1.2 lakh for 2 years at 7% = ₹16,800.
Post Office RD runs for a fixed 5-year tenure at 6.7% per annum (compounded quarterly) as of Q1 FY 2025-26. This rate is set by the Government of India and remains fixed for your entire tenure once you open the account. It's backed by sovereign guarantee, which makes it safer than any bank.
Bank RD rates vary significantly. Public sector banks like SBI offer 6.5–7.0% on standard RDs. Private banks like HDFC, ICICI, and Axis offer 7.0–7.5%. Small Finance Banks — AU, Jana, Ujjivan — offer 7.5–8.5% but carry higher credit risk.
Senior citizens get an additional 0.25–0.50% at most banks, and 0.25% extra at Post Office. If you are 60 or older, always ask for the senior citizen rate before opening any deposit.
| Institution | RD Rate (General) | Senior Citizen Extra | Tenure |
|---|---|---|---|
| Post Office | 6.7% | +0.25% | 5 years fixed |
| SBI | 6.5–7.0% | +0.50% | 6 months–10 years |
| HDFC Bank | 7.0–7.40% | +0.25% | 6 months–10 years |
| AU Small Finance Bank | 7.25–8.0% | +0.25% | 3 months–10 years |
| Ujjivan SFB | 7.50–8.5% | +0.25% | 6 months–5 years |
Interest earned on RDs is fully taxable as 'income from other sources' and must be added to your total income each year. Many people mistakenly think RD interest is taxable only at maturity — it isn't. You're supposed to declare the accrued interest annually in your ITR.
Banks deduct TDS at 10% if your total interest income from all deposits at that bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If you haven't linked PAN, the TDS rate goes up to 20%. Submit Form 15G (or 15H for seniors) if your total income is below the taxable limit — this prevents TDS deduction.
The TDS is deducted at the time of crediting interest, which for RDs typically happens at maturity or on interest posting dates. You can claim TDS credit while filing your ITR.
An RD guarantees your principal and a fixed interest rate. A SIP in a mutual fund offers no guarantee but historically delivers significantly higher returns over 5+ years. The Nifty 50 TRI has delivered approximately 13–14% CAGR over the last 15 years. An RD at 7% doesn't come close.
RD wins when you have a specific short-term goal with a fixed deadline — saving for a vacation in 18 months, a car down payment in 2 years, or a wedding. You cannot afford to have your corpus down 20% when you need the money. SIP wins for goals 5+ years away, especially retirement.
Mixing the two makes sense. Use RD for your emergency fund top-up and near-term goals. Use SIP for long-term wealth building. Putting your emergency fund into an equity SIP because the returns look better is a common mistake that ends badly when markets fall exactly when you need the money.
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rupiya.io is for research and education only. Calculations are estimates based on publicly available data. Not investment advice.