Recurring Deposit Account

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Recurring Deposit Account as the name suggests is an account wherein the deposit recurs. This is called an account but is a savings plan provided by Banks and Financial Institutions.

For example if a person intends to save Rs 1,00,000 by the end of 10 months, the Bank will advice him to open a recurring deposit account and make a deposit of Rs 10,000 for a period of 10 months and to withdraw this amount after 10 months along with interest earned on the amount deposited.

Interest rate is decided by the Bank and communicated to the customer at the time of availing this facility or opening this account. This account unlike other accounts offered by Banks does not accept remittances or remittances cannot be initiated from this account. Usually this account is frozen for other day to day transactions of deposit and withdrawal as the amount is available to the customer only when the required installments are deposited into his account. Once the required amounts are deposited, as per the agreed terms between the Bank and the customer, interest along with the amount is paid back to the customer.

These type of accounts are helpful for individuals who are not sure of their savings incase they do not block a portion of their income to fulfill a future requirement. Some people open a recurring deposit account for marriage, some people open this type of account for buying an asset or a means of transport at a later stage.

There is no minimum balance requirement even in his type of account as this account will close automatically when the money is paid out to the customer at the end of the tenor. Further a recurring deposit account can be withdrawn before the maturity date after deduction as per the Bank's policies which are subject to change.