SBI Recurring Deposit Features & Interest Rate – Jan 2013

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SBI Recurring DepositThere is speculation that RBI would decrease interest rates going forward. Its a good idea to lock your investment in high interest rate by using Recurring Deposit (RD). Below are the features, interest rates, maturity amount along with other details for SBI Recurring deposit.

SBI Recurring Deposit Scheme – Features:

  • Maturity from 12 to 120 Months
  • Nomination facility available
  • The minimum amount of monthly installment shall be Rs 100.
  • The amount of installment and number of installment can not be changed after opening of the account.
  • Loan against security of the balance in the Recurring Deposit accounts available to the extent of 90% of the deposit, at 0.5% p.a. above the rate of deposit
  • No TDS (Tax deduction at source) on interest income
  • Passbook Issued
  • Hassle free premature spot payment anytime
  • Senior citizens get additional 0.5% interest rate (Customers with age greater than 60 years are Senior Citizens)
  • Can open RD online in SBI through e-RD feature in SBI internet banking
  • Charges for RD pre-mature closure - Interest will be applied on premature withdrawal of RD at 1.00% below the rate applicable for the period the deposit has remained with the bank.

SBI Recurring Deposit Interest Rate:

SBI Recurring Deposit Maturity value:

The table below shows the maturity value for Rs 1,000 monthly deposit with interest rate of 8.5% for general and 9% for senior citizens.

SBI Recurring Deposit Maturity value for Rs 1K Monthly Deposit

SBI Recurring Deposit Maturity value for Rs 1,000 Monthly Deposit

SBI RD penalty for default in installment payment:

Whenever a depositor fails to pay the installment on due date for three consecutive months the account shall not be closed and service charge of Rs 10/- is applicable.

Penalty in case of delay in payment of installment of RD of 5 years or less shall be Rs 1.50 for every Rs 100 per month and Rs 2.00 for every Rs. 100 per month for the account on more than 5 years.

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60 thoughts on “SBI Recurring Deposit Features & Interest Rate – Jan 2013

  1. SBI Recurring Deposit is great option but can you also post a comparative list of interest offered by all banks. Could not find a consolidated list anywhere.

  2. Rate of interest on ALL types of deposits offered by different are available on the IBA and RBI websites.
    In youe right up the main thrust is higher rate of intrest available presently which can be ‘locked’ by opening a RD account. The rates are not given! simply the maturity values. If rates could be given your statement, inherently 100% correct & authentic, will carry more weight.

  3. My aim is to have around 100 lakhs in cash at the age of 45, i’m currently 29 and married,
    i’m planning to open SBI RD for 10 years with 5000 Rs a month. and PPF 100,000 Rs a year.

    RD account will give me around 9.5 lakhs and PPF aroung 37 Lakhs total of 47 lakhs.

    Is this a geniun and correct plan, looking for a expert advise on my plan..

    cannot increase the RD amount beyound 5000Rs. Considering future family and emergenc( if any god forbid) expense.

    Also want some suggetions for earning the rest of the amount( 100 – 47=53 lakhs ) to complete my goal of 1 corer in 15 years.

    Thank you.
    Hitesh

    • To get 1 crore in 15 years, you would need to invest around Rs 20,000 per month assuming 12% annual return. You can get such returns only by investing in stock market or mutual fund. But as you might be aware that stock market can be risky too.

      As far as investment in PPF and RD is concerned, it would give an average annual return of 8.5%. So to accumulate Rs 1 crore in 15 years, you would need to invest Rs 28,000 monthly. Also keep in mind that RD returns are taxable on maturity while income from PPF and long term investment in stocks are tax free.

      So you have two option either choose a risky investment (mix of both debt and equity) or increase your monthly investment amount.

      I would soon write a post about various investments options available.

  4. Dear Amit,

    Thank you for your reply,

    However there is some confusion, are interest on RD are taxable? you wrote in above article that “No TDS (Tax deduction at source) on interest income”, please clarify.

    can investment in real estate is an option,

    How about fd with dewan housing and finance ltd. these company have CARE AA+ rating and it give a return of around 12% for 5 years.

    I would like to go for PPF as it is a safe option as far as i think and will give a considerable amount of around 38 lakhs.

    Please let me know whether i have a realistic goal or not as i’m a monthly salaried man with no other income,

    I can invest upto 20000 Rs per month with my current salary.

    Regards,
    Hitesh

    • TDS is what banks need to deduct and submit to Tax Department. But in case TDS is not deducted then its your responsibility to pay tax on the same.

      You might look at real estate but you would need lump sum amount for down payment. Also you must be aware of its risk. Historically Real estate have given good returns but it may or may not do so in future.

      I checked FD rates for DHFL and it was in the range of 10.5% to 11% depending on tenure. And for most of good rated FD this is the range of interest rates you can get. Also remember that interest rates fluctuate, so you may not get similar interest rates after 2 years.

      I would soon write up about different investment options and time it would take for you to achieve Rs 1 crore!

  5. Good Article. Need a consolidated sheet to have rough idea of RD rates in All banks.

  6. Amrendra kumar Dwivedi says:

    why we do not opening online account

  7. Hey guys I have a recurring deposit with the State bank Of India! However I am totally confused regarding the amount of interest they are paying! I checked out a lot of websites but am still clueless! Can anyone help out??

  8. Banks pay interest only at the end of financial year on Fixed deposits and Recurring Deposits. So can I calculate it myself to arrive at my gross income?

    • Its easy to calculate the annual return on fixed deposits and so you can do it yourself. But calculation on Recurring deposit is a bit complicated. Alternatively you can always ask bank for annual interest certificate on your RD * FD.

  9. For example, if my monthly installment is of Rs. 1000, can I deposit Rs. 2000 in any given month in my RD account? If so, will the interest accrued on excess amount be the same as that on the fixed amount?

    • Very few banks allow variable amount in their Recurring deposit scheme. In case you want to take advantage of variable amount every month – ICICI Bank’s iWish is a good RD Scheme.

  10. .How about PostOffice Monthly Income scheme Do i need to despoit in regular basis as like recurring deposit. If so what is the difference between both of them. which one would be fesible. I am planning to invest for Rs 1lac.

    • Post Office Monthly Income scheme (POMIS) is totally different than Recurring deposit (RD) schemes. In POMIS you deposit the amount once and you get monthly interest payout in your savings bank account. In case of RD you need to deposit monthly installment and can withdraw in lump-sum at the time of maturity.

  11. any recurring deposit scheme where deposit amount can very from month to month ?

  12. Which one is better if want put our savings monthly to get good profits
    1.Recurring Deposits
    2.Chits funds.
    Kindly advice

    • Chit Funds are much more risky than Recurring Deposits (RD) and you might have read about a lot fraud happening in chit funds. So my advice would be RD with a reputed bank!

  13. Rs 4000 which I then invest in a recurring deposit at 9% per annum,
    How much interest do I gain per Annum,please kindly calculate it for me.

  14. I am a house wife and i have earned more than Rs10000 in a year as an interest. so do i have to pay the income tax. if yes how much. please suggest me some methods how to save my money and pay minimum tax. I do not have much money. and also i don’t want to invest my money in post offices. is there any rebate if i deposit my money in recurring deposits? if yes than how much. please suggest me.

    • You need not pay any income tax as the minimum exemption limit for income tax fro FY 2013-14 is Rs 2 Lakh. So invest freely without worrying about taxes!

  15. I am planning to invest 2000/- per month for 10 years i.e 120 months,which will be the better option ,whether SIP in Mutual Funds or opening a Recurring Account with SBI or ICICI?
    also tell us How much amount will i get after 12 years if i invest in a particular scheme
    i mean after 10 years
    What are income tax implications of investing in mutual fund i.e whether i have to pay any income tax on mutual fund profits annual vise?

    • The decision to invest in Equity Mutual Fund or Recurring deposit depends on your risk profile and the returns you expect/ require for next 10 years. Remember Mutual funds are more risky and at the same time more rewarding than Recurring deposits. Also for long term like 10 years Mutual Funds are good choice.

      Presently you get around 8.75% for RD while you can expect 12% per annum return on equity mutual funds.

      Also as far as taxation is concerned, in case of RD the interest received needs to added to your income and taxed accordingly. While in case of Mutual fund, the returns are tax free if its sold after one year of investment.

      So decide your risk profile and decide accordingly for your investment!

  16. i hav started the recurring deposits with sbi bank so is it better then fd n which 1 gives highest maturity amount fd or rd.

    • Both has same interest rate, so the returns are same for both FD and RD. You can consider RD as kind of monthly FD, depositing same amount on fixed interest rate for the tenure!

  17. I have opened a recurring a/c in feb’09 with tenure of 60 months. What tax liability will the investment attract and when? How can I avoid the Tax?

    • The total interest gained by you in these 5 years would be added in the year of maturity to your income and taxed accordingly. You cannot do much to avoid genuine taxes. Just plan the outgo for the financial year!

  18. Ushakiran says:

    I recently met someone who claimed to be from a company that collects recurring deposits for Nationalised Indian banks.He said they will first open an account for me in a bank & keep a box in my shop. I am to deposit any amount daily in the box. at the end of the month they total the money in the box, put THEIR money in the RD account at the bank, show me the bank receipt & then take the money from my box.
    is this a scam or is this for real?

    • It can be real or may be scam. The best thing would be to verify with the bank in which that RD is going to be opened! One thing that can go wrong is fake bank slips!

  19. i need some savings to be made after 15 yrs from Now.I am enrolled in LIC jeevan anand scheme. can you suggest me other options to invest where i can get good returns after 15 yrs. i can invest 80k P.A

  20. Prashansa says:

    Hi, anybody know details of the eRd(electronic Recurring Deposit) in SBI(state bank of india). Is it needed to open seperate account or we can pay amount with our existing Saving Account. When can we close the account?. is it possible to close account whenever we want?.. any penalties?. is that really useful?

  21. Does it help in saving tax or something.
    Because the final amount that matures is not that lucrative.

  22. hello sir,

    Actually, i have an sbi acount in one branch and RD account in other branch. i opened RD account on 19 may 2012 for one year. and my RD account is maturied on 19 may 2013. i think the amount will collect on my sbi account. but it was not done. how can i get the amount in my sbi account, because i am away for the branch where i had RD account.please help me.

  23. is ther any deposits for 15,20,25 years

  24. PRASANTA PRATIHAR says:

    i am prasanta pratihar
    halp me

  25. hi amit,

    PPF means Public Provident Fund ?

    HOW CAN WE MAKE INVESTMENT IN PPF OTHER THAN FROM SALARY DEDUCTION

  26. HOW CAN WE OPEN INVESTMENT IN PPF A/C IN SBI

    IS RATE OF INTEREST ARE DIFFER FROM BANK TO BANK?

  27. Hi Amit,

    I have been investing Rs 4000 per month in Aegon Religare and Rs 1000 in Sundram mutual fund tax saver since August 2010. the locking period was for three years which is going to end this year , in next two months.
    However I can see that my total fund value and the savings till date has done no good to me. So I am not sure, if I should withdraw my amount from these investments or discontinue with installments but do not withdraw money or renew the plan and ocntinue with installments.

    Also I started SBI RD Rs 10000 per month for one year last year june 2012.Could you please tell me how much amount will I get and by when

  28. hi amit,

    U/S that in PPF A/C single person can open a single a/c;

    At opening i want invest some amount arougd 50K; can i increase the amount to 1 Lak by adding extra 50K in near future;

  29. hello sir

    please guide me which scheme is better for an monthly saving 8000 rs for ten years
    I can get after 8 years 10,99,408 by SBI RD but it is taxable
    tell how much amount i have to pay tax after maturity other wise any other schemes is there in LIC OR post office to get same amount with tax exemption

  30. Plz suggest me which1 is best ppf or rd in sbi if you want to earn more profit.

  31. I am married with one daughter, working in railway under NPS. My net income is 36000. My savings plan is as under…
    LIC Jivan Anand(18 yr) = yearly prm. Rs.19687.
    LIC Jivan saral(22 yr)= yearly prm Rs.36030.
    PPF=Rs.25000 yearly.
    NEW PENSION cutting=Rs.2757 monthly.
    My monthly expense is Rs.20000. I have spare money about Rs. 5000 p.m. For which i can take moderate risk.

    Please suggest about my financial planning what i have done..and what extra i should do. My age is 37.

  32. what is good opening a RD account with big amount for a short period of time or with a small amount for a longer period. please tell me in term of return which i get

  33. my age is 25 and annual income is 300000. what plan i choose to get more 5000000 at the age 45.

  34. Satyanarayan says:

    I am interested to open a RD Account for Rs.500 for Every Month for the tenure of 2 years . Which bank will be safe for me ? UCO or SBI Bank ? Please Suggest me.

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