A Recurring Deposit (RD) is a special term deposit offered by banks that allows you to save a fixed amount every month for a predetermined tenure (6 months to 10 years). The deposited amount earns interest (usually compounded quarterly) and the entire amount is paid at maturity.

Yes, but with conditions:

• Most banks allow premature closure after 6 months
• Penalty of 0.5% to 1% on the applicable interest rate
• Interest paid will be lower of: original rate minus penalty or savings account rate
• Some banks may not allow partial withdrawals

RD interest rates vary by bank and tenure, typically ranging between 5% to 7.5% for general citizens and 0.5% higher for senior citizens. Current trends:

The minimum monthly deposit varies by bank:

• Public sector banks: ₹100-₹500
• Private banks: ₹500-₹1,000
• Post Office RD: ₹100 per month
• No upper limit in most cases

Some banks offer flexible RDs where you can increase deposits periodically.

RD interest is calculated using the quarterly compounding formula. Each deposit earns interest from the date of deposit till maturity. The calculation considers:

1. Monthly deposits treated as separate deposits
2. Interest calculated on each deposit based on remaining tenure
3. Compounded every 3 months (quarterly)
4. Total of all deposits plus accrued interest paid at maturity

Yes, RD interest is fully taxable as per your income tax slab. Key points:

• Banks deduct 10% TDS if interest exceeds ₹40,000 annually (₹50,000 for seniors)
• You can submit Form 15G/15H to avoid TDS if eligible
• Interest must be declared under "Income from Other Sources"
• Post Office RD interest is tax-free up to ₹3,500 (₹7,000 for joint accounts)

Yes, most banks offer loans against RDs up to 85-90% of the deposit value. Benefits include:

• Lower interest rates than personal loans (typically 1-2% above RD rate)
• No prepayment penalty
• Quick processing with minimal documentation
• RD continues earning interest while loan is active

Consequences vary by bank policy:

• Most banks give a grace period of 5-15 days
• After grace period, penalty of ₹50-₹100 per missed installment
• Multiple defaults may lead to account closure at lower interest rate
• Some banks allow make-up payments in subsequent months
• Post Office RD allows up to 4 defaults (with penalty) before auto-closure