What is Recurring Deposit (RD)?

A Recurring Deposit (RD) is a savings product where you deposit a fixed sum every month for a fixed tenure. At maturity, you receive the total amount deposited plus interest. RDs are ideal for those who cannot invest a lump sum but can save monthly.

How Does an RD Work?

You choose a monthly installment and a tenure. Each installment is compounded (usually quarterly) for the remaining period. At maturity you get all installments plus interest.

RD vs FD

Choose FD when you have a lump sum; choose RD when you save monthly. Use our FD vs RD calculator and read FD vs RD.

Related tools

How RDs took off in salaried India

The RD took off in India in the 1980s as PSU banks pushed it as a salary-linked saving product. Open it once, set up a standing instruction on payday, and the RD essentially runs itself for the next one to ten years. Because the installment is small and automatic, it works for households that cannot find ₹50,000 lying around for an FD but can comfortably commit ₹2,000–₹5,000 a month from the monthly cash flow.

The RD has two relatives that work the same way: the post-office RD (slightly different rate, fixed 5-year tenure) and the chit fund (community RD with a bidding mechanism, much higher risk). For pure goal-based saving with bank-grade safety, the bank RD remains the simplest tool — and the calculator above lets you see exactly what your monthly habit will compound to.

Worked example: ₹2,000/month for 5 years at 6.8%

Monthly installment: ₹2,000
Tenure: 60 months
Annual rate: 6.80%
Total deposited: ₹1,20,000
Maturity amount: ₹1,43,142
Interest earned: ₹23,142

A modest ₹2,000/month, sustained for five years, becomes ₹1.43 lakh — useful for a Class 12 board-exam fee fund, a small wedding contribution, or a down-payment top-up.