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Procedure: How to Open a Recurring Deposit (RD)

January 30 , 2013
  1. Recurring deposit is a term deposit that lets you make regular deposits of fixed amount for a chosen term. Interest on recurring deposit is same as that in fixed deposit. You can choose the amount, term and frequency. Amount should be in multiples prescribed.
  2. Interest over Rs 10,000 is taxable according to your tax slab. However TDS is not applicable. You need to declare interest along with income from interest while filing tax returns.
  1. If you are a net banking customer you can log in and choose the option to open new recurring deposit. Else you can pick up a form from the branch where you have a savings account and fill in all relevant details regarding deposit amount, term and frequency of making deposits.
  2. You need to give a standing instruction for transferring money from your savings account to the recurring deposit account. You will be issued a certificate indicating maturity date, maturity amount, etc. Verify if these are correct.
  1. At maturity you can redeem your deposit by filling up date and amount on the back of the certificate. Banks allow closing of account before the term ends. Interest will be paid at the rate applicable on the date of deposit for term the deposit was made at the bank. If you withdraw prematurely the bank can charge a penal interest as high as 1%.

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