[1][2] It's similar to making fixed deposits of a certain amount in monthly installments.
The minimum period of a recurring deposit is six months, and the maximum is ten years.
[3] The recurring deposit can be funded by standing instructions, which are instructions by the customer to the bank to withdraw a certain sum of money from his/her savings or current accounts and credit the recurring deposit account.
When the recurring deposit account is opened, the maturity value is indicated to the customer, assuming that the monthly installments will be paid regularly on due dates.
If any installment is delayed, the interest payable in the account will be reduced and insufficient to reach the maturity value.
[2] The rate of interest offered is similar to that of regular fixed deposits.
[4] The formula to calculate the maturity amount is as follows: Total sum deposited+Interest on it
Where: Tax deducted at source (TDS) applies to recurring deposits in India.
If the interest earned on recurring deposits exceeds Rs.
Investors without taxable income must submit a Form 15G to avoid TDS on recurring and fixed deposits.
Investors who are senior citizens (above the age of 60) will have to file Form 15H to avoid TDS on recurring and fixed deposits.