RD Calculator
Project what a monthly recurring deposit matures to — monthly instalment, interest rate and tenure in, maturity value and interest earned out (India-Post quarterly compounding).
Year-wise growth
| Year | Invested | Value at year end |
|---|---|---|
| 1 | ₹60,000 | ₹62,143 |
| 2 | ₹1,20,000 | ₹1,28,425 |
| 3 | ₹1,80,000 | ₹1,99,122 |
| 4 | ₹2,40,000 | ₹2,74,527 |
| 5 | ₹3,00,000 | ₹3,54,954 |
What is a Recurring Deposit (RD)?
A Recurring Deposit (RD) is a disciplined monthly savings contract offered by commercial banks and post offices that enables savers to invest a fixed sum of money every month over a predetermined tenure (ranging from 6 months up to 10 years). The interest rate is locked in at the time of booking, shielding your monthly savings from future interest rate declines.
Unlike mutual fund SIPs which carry market risk, recurring deposits provide 100% capital safety and guaranteed returns. Indian commercial banks apply the statutory quarterly compounding convention on recurring deposits, meaning earlier instalments compound for more quarters than later instalments. This calculator computes exact maturity proceeds using RBI-compliant compounding schedules.
How Recurring Deposit Compounding Works
The mechanics of compounding in an RD account reflect the varying investment duration of each monthly instalment:
- First Month's Instalment: Stays in the bank for the full tenure (e.g., 60 months in a 5-year RD) and earns 20 quarters of compound interest.
- Subsequent Instalments: Each monthly deposit earns interest for one less month than the previous deposit (Month 2 earns 59 months, Month 3 earns 58 months, and the final 60th instalment earns interest for just 1 month).
- Quarterly Compounding: Interest is compounded at the end of each calendar quarter and credited to the accumulated balance, ensuring your monthly savings grow exponentially over long tenures.
The Indian Banking RD Compounding Formula
M = ∑ [ P × (1 + r/4)^(4 × (n − i + 1) / 12) ] for i = 1 to n
- M — Total maturity corpus received at the end of tenure.
- P — Fixed monthly instalment deposited.
- r — Contracted annual interest rate as a decimal (e.g. 7.0% → 0.07).
- n — Total number of monthly instalments (Tenure in months).
- i — Index of the specific monthly instalment (from 1 to n).
The IBA formula calculates quarterly compounding on each instalment for its exact fractional tenure, matching bank passbook maturity values to the single rupee.
A Worked Example: ₹5,000 per Month for 5 Years at 7.0% p.a.
Detailed Financial Breakdown for a ₹5,000 Monthly Recurring Deposit:
- Monthly Deposit: ₹5,000
- Interest Rate: 7.00% per annum (compounded quarterly)
- Tenure: 5 Years (60 Monthly Instalments)
- Total Principal Deposited: ₹3,00,000 (₹5,000 × 60)
- Total Interest Earned: ₹59,800.74 (~₹59.8K)
- Final Maturity Value: ₹3,59,800.74
Recurring Deposit Maturity Projections Across Tenures at 7.0% p.a.
| Monthly Deposit | 1 Year (12 mos) | 2 Years (24 mos) | 3 Years (36 mos) | 5 Years (60 mos) |
|---|---|---|---|---|
| ₹1,000/mo | ₹12,462 | ₹25,820 | ₹40,143 | ₹71,960 |
| ₹2,500/mo | ₹31,154 | ₹64,550 | ₹1,00,358 | ₹1,79,900 |
| ₹5,00,0/mo | ₹62,308 | ₹1,29,100 | ₹2,00,715 | ₹3,59,801 |
| ₹10,000/mo | ₹1,24,617 | ₹2,58,201 | ₹4,01,430 | ₹7,19,601 |
| ₹25,000/mo | ₹3,11,542 | ₹6,45,502 | ₹10,03,576 | ₹17,99,004 |
Computed using standard Indian banking quarterly compounding at 7.0% p.a. Senior citizens typically receive 0.50% higher interest rates.
Taxation Rules: Section 194A TDS, Form 15G/15H & Premature Closure
Tax provisions and premature exit guidelines for Recurring Deposits:
- Slab Rate Taxation: Like fixed deposits, interest earned on recurring deposits is added to your total income under "Income from Other Sources" and taxed at your slab rate.
- TDS under Section 194A: Banks deduct 10% TDS if cumulative interest earned across all fixed and recurring deposits in a bank exceeds ₹50,000 in a financial year (₹1,00,000 for senior citizens). Submit Form 15G/15H if your total income is below the taxable threshold.
- Default Penalties: If you miss a monthly instalment, banks charge a small late fee (typically ₹1.50 to ₹2.00 per ₹100 of deposit per month). If consecutive instalments are missed for 4 to 6 months, the account may be closed prematurely.
Recurring deposit questions, answered
Crucial answers on quarterly compounding, TDS thresholds, missed instalments, and comparison with mutual fund SIPs.
In India, commercial banks calculate RD interest using quarterly compounding based on Indian Banks' Association (IBA) rules. Each monthly instalment is treated as an independent term deposit compounding for its remaining duration up to maturity.
Yes. Interest from recurring deposits is fully taxable at your applicable income tax slab rate under "Income from Other Sources". It must be declared in your annual income tax return under both the Old and New Tax Regimes.
Yes. Under Section 194A, banks deduct 10% TDS if total interest earned across all your fixed deposits and recurring deposits in a bank exceeds ₹50,000 per financial year (or ₹1,00,000 for senior citizens). Submit Form 15G/15H to prevent deduction if eligible.
An RD offers a guaranteed, fixed return (typically 6.5%–7.5%) with zero capital risk and DICGC protection. A Mutual Fund SIP invests in market-linked equities or bonds without guaranteed returns, but historically delivers higher long-term returns (11%–14% CAGR) and enjoys lower capital gains tax rates.
If you miss an instalment date, banks levy a nominal penalty (usually ₹1.50 to ₹2.00 per ₹100 of the monthly instalment per month). If you default on 4 to 6 consecutive instalments, the bank may deactivate or prematurely close your RD account.
Yes. You can prematurely close your RD account at any time. The bank will pay interest for the period the deposit actually remained with the bank, minus a premature penalty of 0.50% to 1.00%. Partial withdrawals from regular bank RDs are not permitted.
Commercial banks offer RD tenures from a minimum of 6 months up to a maximum of 10 years (120 months). Post office recurring deposits are issued for a fixed 5-year tenure with an optional 5-year extension.
Yes. Most commercial banks and small finance banks offer an additional interest rate premium of 0.50% to 0.75% per annum to senior citizens (aged 60 and above) on recurring deposits across all tenures.
No. The monthly instalment amount is fixed at the time of account opening and cannot be altered during the tenure. However, some banks offer specialized "Flexible RD" products (such as SBI Flexi Deposit) where you can vary deposits within set limits.
Yes. Most banks permit loans or overdraft facilities of up to 80% to 90% of the accumulated RD balance. The interest rate charged is typically 1% to 2% higher than the contracted RD interest rate, allowing emergency access to cash without closing the account.