Recurring Deposit is a special type of deposit account which enables a depositor particularly in fixed income group to save by paying into the account an agreed fixed sum of money monthly over a stipulated period. The deposits in this type of account earn compound interest on quarterly basis. Longer the period for which monthly deposits are agreed to be made higher is the rate of interest subject to rules.

KYC ( Know Your Customer) Norms for opening account are applicable for these accounts also hence proof of residence and proof of identification will be required along with recent photograph of the depositor/s

Features of Recurring Deposit Account :

• The main objective of recurring deposit account is to develop regular savings habit among the public.
• In India, minimum amount that can be deposited is Rs.10 at regular intervals.
• The period of deposit is minimum six months and maximum ten years.
• The rate of interest is higher.
• No withdrawals are allowed. However, the bank may allow to close the account before the maturity period.
• The bank provides the loan facility. The loan can be given upto 75% of the amount standing to the credit of the account holder.

Advantages of Recurring Deposit Account :

• Recurring deposit encourages regular savings habit among the people.
• Recurring deposit account holder can get a loan facility.
• The bank can utilise such funds for lending to businessmen.
• The bank may also invest such funds in profitable areas.

Types of Accounts
Only individuals are eligible to open accounts under the scheme. Thus, the Recurring Deposit Accounts can be opened in the names of :

• Individual — Single Accounts
• Two or more individuals — Joint Accounts
• Illiterate Persons
• Blind Persons
• Minors

Opening of Accounts :

A Recurring Deposit account where the compounding of interest is to be done on quarterly basis shall be accepted for periods in multiples of three months only upto the maximum period of ten years..

Minimum Amount of monthly installment Recurring Deposits will be in equal monthly instalments. The core monthly instalment should be minimum Rs. 500/ in Metro and urban Branches and Rs.100/- or above in Semi urban/Rural Branches and in its multiples. There is no maximum limit.

Installments of any calendar month should be paid on or before last working day of that calendar month and if it is not so paid penalty will be charged on the installments in arrears at the following rates Rs.1.50 for every Rs.100/- p.m. for deposits of 5 years and less Rs.2.00 for every Rs.100/- p.m. for deposits of over 5 years. Where installments in the account are deposited in advance, penalty payable in respect of delayed installments may be waived by the Bank if the equal number of advance installments are deposited.

TDS on Recurring Deposits :

• As per amendments brought about in Finance Act 2015, TDS will be applicable for Recurring Deposits, also.