How to Create an Account for Recurring Deposits?

What is a Recurring Deposit (RD) Account?

A Recurring Deposit (RD) account is one of the most straightforward and reliable ways to build a savings habit. Think of it as a disciplined savings tool—every month, you deposit a fixed sum, and your money earns interest at a predetermined rate. Over time, these regular contributions accumulate into a substantial sum, which you receive at maturity, along with the accumulated interest.

Banks and financial institutions across India offer RD accounts, which have become a preferred choice for those seeking guaranteed returns without the volatility of the stock market. The deposit amount is flexible—some banks let you start with as little as ₹100 per month, while others have a higher minimum. Tenure can range from six months to a decade, allowing you to align your savings plan with your financial goals, whether it’s buying a gadget, funding a vacation, or saving for your child’s education.

One of the main attractions is the interest rate. As of 2024-25, most leading banks offer rates between 5% and 7% per annum, depending on the tenure and the amount. Senior citizens often enjoy an additional 0.5% per annum. This makes RDs an attractive alternative to standard savings accounts, which typically offer lower returns. Even as repo rates have fluctuated, RD rates have held steady for most tenures, reflecting the product’s appeal as a conservative investment.

Opening a Recurring Deposit (RD) online is easy today. Most banks and post offices now offer online RD account openings through their Internet banking or mobile app platforms. All you need to do is log in to your bank’s digital portal, select the option for ‘Open Recurring Deposit’, and fill in the required details—such as deposit amount, tenure, and frequency.

After confirming the terms, your RD account is instantly created, and you can set up automatic monthly transfers from your savings account. This not only saves you a trip to the branch but also allows you to manage and monitor your RD anytime, anywhere.

Different Types of RD Accounts Offered by Banks

While the recurring deposit concept remains universal, banks offer a variety of RD accounts to cater to different customer segments and needs:

• Regular RD Account: The classic version, designed for adults with regular income. It’s the go-to choice for both salaried employees and small business owners.
   
• Minor or Junior RD Account: Ideal for parents who want to instil a savings habit in their children. These accounts can be opened by a guardian on behalf of a minor and often come with educational themes to encourage early saving.
   
• Senior Citizen RD Account: Specifically tailored for customers aged 60 and above. Besides the usual safety and predictability, these accounts offer higher interest rates, typically about 0.5% more than standard regular deposit (RD) accounts.
   
• NRI RD Account (NRE/NRO): Non-Resident Indians can open RDs in India through their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts. While the process is similar, interest earned on NRE RDs is tax-free in India, and tenures may start from a minimum of one year.
   
• Flexi RD Account: Some banks recognise that not everyone can commit to a fixed deposit every month. Flexi RDs allow for variable monthly contributions, letting customers deposit more in some months and less in others. This suits those with irregular incomes or seasonal earnings.

Most banks also offer special RD schemes for specific goals, such as child education, marriage, or short-term dreams. Despite the variety, all RD accounts work on the same basic principle: fixed, regular deposits, assured interest, and a lump sum payout at maturity.

Additional Read: Difference Between SIP & Recurring Deposit

Step-by-Step Process to Open an RD Account

Starting a recurring deposit account is refreshingly straightforward. Here’s a clear step-by-step guide:

1. Decide Your Monthly Deposit and Tenure:

Reflect on how much you can comfortably set aside each month. RD accounts can start from as little as ₹100 per month, and you can choose a tenure ranging from 6 months to 10 years. Consider your financial goal—a short-term purchase, long-term education, or emergency fund—and set your amount and duration accordingly.

2. Gather the Required Documents:

Banks require basic KYC documentation. Typically, you’ll need:

• Proof of identity (Aadhaar, PAN, passport)
• Proof of address (utility bill, driving license, ration card)
• Passport-size photographs
• If you already have a savings account with the bank, most of this is already in their system, making the process smoother.

3. Select Your Mode of Application:

While online methods are popular these days, we will also focus on the branch-based method. However, knowing your options is always helpful. Online RD opening is generally available through your bank’s internet banking portal or mobile app.

4. Fill Out the RD Application:

Request the RD application form from the branch. Complete it carefully, filling in your deposit amount, tenure, and nominee details and linking it to your savings account (for auto-debit).

5. Submit the Form and First Deposit:

Hand over the completed form along with your documents. You’ll also need to make your first deposit—either in cash or by cheque. The bank will provide a receipt or an entry in your passbook as confirmation of the transaction.

6. Confirmation and Activation:

Once the paperwork is processed (usually on the same day), you’ll get an RD account number and a schedule of upcoming payments. The bank sets up a standing instruction for monthly auto-debit from your savings account. Your RD is now active, and you’ll receive regular updates either in your passbook or via SMS/email.

7. Track and Maintain Your RD:

Ensure your savings account has a sufficient balance each month to avoid missed installments. Missed payments can affect your interest rate or even result in penalties with some banks. Regular monitoring, either through passbook entries or digital banking, is wise.

How to Open an RD Account by Visiting a Bank Branch

For many, the in-branch experience offers comfort and clarity, especially for those new to banking or who prefer personal assistance. Here’s how to open an RD account by visiting a bank branch:

Step 1: Visit Your Chosen Bank with Documents:

• Carry your KYC documents and, if possible, a filled RD application form (available at the branch). Having your savings bank account details ready will save time.

Step 2: Fill Out the RD Application:

• The branch staff will guide you through the form if you need help. You’ll specify your monthly deposit, tenure, and nominee details. Senior citizens should mention their age to ensure they get the higher rate.

Step 3: Submit Documents and Initial Deposit:

• Submit your form, identity and address proofs, and make your first instalment. The bank staff will verify your details and provide a stamped acknowledgement.

Step 4: Confirm Auto-Debit Setup:

• Authorise a standing instruction for monthly auto-debits. The bank will link your savings account and take care of the rest.

Step 5: Collect Your RD Passbook or Receipt:

• You’ll receive either a passbook entry or a printed receipt showing your RD account details. Double-check all information for accuracy before leaving the branch.

The entire process is designed to be user-friendly. If you’re an existing customer, most of your information is already on file with the bank, making the process even faster. Bank staff are trained to assist and answer any questions you may have—don’t hesitate to ask, especially if you’re new to financial products.

A recurring deposit account is one of the most effective ways to build disciplined savings without risking your principal. With competitive interest rates (currently around 5%–7% per annum, with a bonus for seniors), RDs bridge the gap between the safety of a savings account and the higher returns of fixed deposits or mutual funds.

The process to open an RD is uncomplicated: decide your savings plan, gather your documents, visit your bank, and let the staff guide you through. Once set up, your RD quietly works in the background, helping you achieve your financial goals—big or small.

Interest rate trends show that while RD rates may fluctuate slightly with economic cycles, they continue to offer a reliable, risk-free return for the average saver. If you’re ready to start, all it takes is a click of a button or a visit to your nearest bank branch and a commitment to consistent saving.

Saving is a habit best built one step at a time. An RD account offers that exact path—simple, dependable, and always within reach.
 

Additional Read: Fixed Deposit vs Recurring Deposit : Key Differences & Best Choice
Additional Read: RD vs Debt Funds: Know the difference in both investments