Modified on : 15 Dec 2018

RD (Recurring Deposit) Accounts / SIP Accounts

Recurring Deposit / SIP accounts provide the facility of saving small amounts of money every month to meet future financial goals. The scheme is also called by the name Systematic Investment Plan (SIP). The investment in Recurring Deposit / SIP accounts earn interest at the rates applicable to Time / Fixed deposits for the corresponding period of investment.

These accounts are ideal for investors, who want to plan to save / invest a fixed amount of their income at every month and earn relatively higher interest on their investments for future liabilities like education and marriage of children, purchase /construction of house etc.

Salient features of Bank RD / SIP Accounts

EligibilityAdult individuals, singly or jointly with other adults
RequirementsThe requirements for opening of accounts are the same as mentioned under Savings Bank Accounts.

Usually Recurring Deposit Accounts are maintained by banks for Saving Bank / Current Account holders only.

Minimum amount₹ 100/- per month. The minimum amount varies from bank to bank.
Maximum amountNo Maximum limit
Maturity Period12 months to 10 years.
Interest RateThe Interest Rate varies from bank to bank.

The Interest Rate is as applicable to Term / Fixed deposit accounts in the concerned bank.

Usually deposits for longer periods attract higher interest rates.

The interest is usually compounded at quarterly rests.

Nomination facilityAvailable
TransferabilityTransferable from one branch of the bank to another.
Tax benefitsNot Available
Interest TaxabilityWith effect from 1st April 2018 (AY 2019-20) Senior Citizens (i.e. Residents aged 60 years or above) are eligible for exemption of interest income from Bank / Post Office deposits (Saving accounts / Time deposits / RD accounts) upto ₹ 50,000/- under Section 80TTB. (They are, however, not eligible for rebate under section 80TTA.)

Account holder other than Senior Citizens are not eligible for any exemption.

Overdraft / Loan facilityOverdraft/loan facility is available against security of the balance in the account.
Premature paymentPremature payment is allowed subject to penalty of lower interest.
Other features
  • A pass book is issued in Recurring Deposit Accounts.
  • Delayed payment of monthly installments invite penalties.
  • Monthly instalment can be deposited by way of standing instruction from Saving Bank or Current Account.

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