A Recurring Deposit (RD) is the disciplined-saver’s version of an FD — instead of a lump sum, you deposit a fixed amount every month and earn interest on the growing balance. If you don’t have a large sum sitting idle but can commit to a monthly amount, this is one of the safest ways to build a corpus in India.
[Use the RD Calculator above ↑] — enter your monthly deposit, rate, and tenure to see your exact maturity value.
Rates vary by bank and tenure, and change more frequently than the Post Office’s quarterly-revised rate:
| Provider | Rate (general citizens) | Notes |
|---|---|---|
| Post Office RD | 6.7% p.a. | Fixed for the quarter, revised by the Ministry of Finance every Jul–Sep, Oct–Dec, etc. |
| SBI | ~6.25–6.4% p.a. | Same as SBI’s FD rate for the matching tenure; up to 6.9% for senior citizens on 2-year tenure |
| ICICI Bank | 4.5–6.5% p.a. | Rate increases with tenure; senior citizens get an additional rate, up to 7.1% on 3–5 year tenures |
| PNB | Varies by tenure | Minimum ₹100/month, up to ₹25 lakh/month maximum |
The Post Office RD is popular precisely because it’s simple and government-backed — the rate is fixed for your entire tenure once you open the account, even if the government revises rates for new accounts afterward.
Unlike an FD, where your entire principal earns interest from day one, an RD’s interest calculation is more nuanced — each monthly deposit earns interest only from the date it’s made until maturity. Your first month’s deposit earns interest for the full tenure; your last month’s deposit earns interest for just one compounding period.
Banks and the post office use quarterly compounding with this formula:
M = P × [(1+i)ⁿ − 1] / [1 − (1+i)^(−1/3)]
Where P is your monthly deposit, i is the quarterly interest rate (annual rate ÷ 400), and n is the number of quarters in your tenure. This is exactly what the calculator above does automatically — you don’t need to work through the math by hand.
Choose an RD if: you don’t have a lump sum but can commit to a fixed monthly amount, and you want a guaranteed, government-or-bank-backed return with zero market risk.
Choose an FD if: you already have a lump sum sitting in savings and want it to start earning interest immediately, rather than gradually over the deposit period. Our FD Laddering Calculator can help you plan that.
Choose a SIP if: you’re comfortable with market-linked risk in exchange for potentially higher long-term returns — an RD’s guaranteed return generally can’t match long-term equity market performance, but it also can’t lose value the way an SIP’s underlying investments can.
What is the current Post Office RD interest rate?
6.7% per annum, compounded quarterly, for the July–September 2026 quarter. This rate is revised quarterly by the Ministry of Finance, though your rate stays fixed for your entire tenure once you open the account.
Can I withdraw my RD before maturity?
Yes, but premature closure typically carries a penalty — around 1.8% for Post Office RDs — and is usually only allowed after a minimum holding period (commonly 3 years for a 5-year Post Office RD).
Is RD interest taxable?
Yes — RD interest is added to your total income and taxed at your applicable income tax slab rate, same as FD interest.
What’s the minimum amount to start an RD?
As low as ₹100/month at the Post Office and most major banks, making it accessible even for very small, disciplined savings goals.
See also our FD interest rates guide and passive income ideas in India for more ways to grow your savings safely.
