If you’re looking for a safe and disciplined way to save money, recurring deposits (RDs) are a great option. Especially for individuals who can’t invest a lump sum at once, RDs offer the dual benefit of regular savings and guaranteed returns.
In this guide, we explore high interest recurring deposit schemes in India, the best banks to consider in 2025, and tips to maximize your earnings.
📌 What is a Recurring Deposit (RD)?
A Recurring Deposit is a fixed amount investment product offered by banks and NBFCs, where you deposit money every month for a fixed tenure and earn interest on it. The final maturity amount includes the principal and the accumulated interest.
✅ Key Features:
- Fixed monthly investment
- Tenure: 6 months to 10 years
- Premature withdrawal possible (with penalty)
- Guaranteed returns
- Suitable for salaried individuals
🎯 Benefits of High Interest RD Schemes
| Benefit | Description |
|---|---|
| Safe and Secure | RDs are not market-linked, offering capital protection. |
| Fixed Returns | Interest rates are locked for the entire tenure. |
| Discipline in Saving | Encourages regular saving habits |
| Flexible Tenure Options | Choose between 6 months to 10 years |
| Loan Facility | Some banks offer loans against your RD amount |
🏦 Top High Interest RD Schemes in India (June 2025)
Here’s a comparison of popular banks and financial institutions offering the best RD interest rates for regular citizens (non-senior citizens):
| Bank / NBFC | Interest Rate (p.a.) | Tenure Range | Monthly Min Deposit |
|---|---|---|---|
| Equitas Small Finance Bank | 8.25% | 12 months – 36 months | ₹1,000 |
| Jana Small Finance Bank | 8.20% | 1 year – 3 years | ₹100 |
| Utkarsh Small Finance Bank | 8.00% | 12 months – 3 years | ₹500 |
| Fincare Small Finance Bank | 7.90% | 12 months – 5 years | ₹500 |
| Yes Bank | 7.25% | 1 year – 10 years | ₹1,000 |
| RBL Bank | 7.10% | 12 months – 5 years | ₹500 |
| IDFC First Bank | 7.00% | 6 months – 10 years | ₹100 |
| HDFC Bank | 6.50% | 6 months – 10 years | ₹500 |
| SBI (State Bank of India) | 6.40% | 1 year – 10 years | ₹100 |
| Post Office RD | 6.70% (compounded quarterly) | 5 years only | ₹100 |
💡 Note: Interest rates may vary based on tenure and bank discretion. Always verify current rates on official websites.
👴 Senior Citizen RD Interest Rates
Most banks offer 0.50% additional interest for senior citizens. For instance:
- HDFC Bank Senior Citizen RD – Up to 7.00%
- SBI Senior Citizen RD – Up to 6.90%
- Jana Bank Senior Citizen RD – Up to 8.70%
📢 Senior citizens can consider longer-term RDs for higher cumulative returns.
💡 RD vs FD: What’s Better for You?
| Feature | Recurring Deposit (RD) | Fixed Deposit (FD) |
|---|---|---|
| Investment Type | Monthly installment | One-time lump sum |
| Flexibility | Fixed monthly commitment | Flexible, but requires lump sum |
| Suitable For | Salaried individuals, beginners | Investors with ready cash |
| Interest Rate | Slightly lower than FD | Slightly higher than RD |
If you prefer monthly savings and don’t have a lump sum, RD is ideal.
🧮 How to Calculate RD Maturity Amount
The maturity amount for an RD is calculated using this formula:
iniCopyEditM = R × [ (1 + i)^n – 1 ] / (1 – (1 + i)^-1/3 )
Where:
- M = Maturity amount
- R = Monthly deposit
- i = Interest rate/400
- n = Number of quarters
Example:
Suppose you invest ₹2,000/month in an RD for 2 years at 7.5% interest.
| Details | Value |
|---|---|
| Monthly Deposit (R) | ₹2,000 |
| Tenure | 24 months |
| Interest Rate (Annual) | 7.5% |
| Maturity Value (approx.) | ₹53,100 |
Use online RD calculators from SBI, HDFC, or Groww for quick estimates.
🔍 Best RD Schemes by Category
✅ For Highest Interest:
- Equitas Bank RD – 8.25%
- Jana Small Finance RD – 8.20%
✅ For Government Backing:
- India Post Office RD – 6.70%, 5-year lock-in
- SBI RD – 6.40% with reliability
✅ For Tech-Friendly Experience:
- IDFC FIRST Bank RD
- Yes Bank Smart RD
📱 How to Start an RD Online
Most banks offer RD creation through their mobile apps and internet banking platforms. Here’s the general process:
- Log in to your internet banking/mobile app.
- Go to Deposits > Open Recurring Deposit.
- Choose amount, tenure, and frequency.
- Confirm and submit.
✅ Auto-debit ensures your monthly investment is never missed.
🧠 Tips to Maximize RD Returns
- Choose longer tenure: Higher tenure often yields higher interest.
- Opt for Small Finance Banks: They offer better rates but check deposit insurance.
- Use monthly interest compounding: For better yield.
- Stay invested till maturity: Premature withdrawals incur penalties.
- Compare before locking in: Use FD/RD comparison tools online.
⚠️ Things to Watch Out For
| Caution | Why It Matters |
|---|---|
| Penalty on Premature Exit | Banks may deduct 1% or more on interest earned |
| Tax on Interest Income | TDS applies if total interest exceeds ₹40,000/year |
| Inflation Impact | Long tenures may see returns offset by inflation |
| Liquidity Lock-in | No access to funds until maturity unless broken early |
📢 Consider the post-tax return and real purchasing power when choosing an RD scheme.
🧾 Taxation on Recurring Deposits
- Interest earned on RD is fully taxable under “Income from Other Sources.”
- TDS @ 10% is deducted if yearly interest exceeds ₹40,000 (₹50,000 for senior citizens).
- File your Form 15G/15H if your income is below the taxable limit to avoid TDS.
🧘 Ideal RD Strategy for 2025
- Combine multiple RDs with staggered maturities (laddering strategy)
- Opt for high-yield small finance bank RDs for short tenures
- Consider Post Office RDs for risk-free government backing
- Use SIPs in mutual funds for long-term growth alongside RDs
🔄 RD Laddering Example
Instead of a single ₹3,000/month RD for 3 years, consider:
| RD | Monthly Amount | Tenure | Expected Return |
|---|---|---|---|
| RD1 | ₹1,000 | 1 year | 7.0% |
| RD2 | ₹1,000 | 2 years | 7.5% |
| RD3 | ₹1,000 | 3 years | 8.0% |
This helps manage liquidity while taking advantage of rising interest rates.
✅ Conclusion
Recurring Deposits remain one of the safest and most accessible investment options in India, especially for conservative and salaried investors. In 2025, with rising interest rates from small finance banks and digital platforms simplifying access, it’s a great time to start or diversify your RD portfolio.
Whether you’re saving for a goal or just looking for stability, high interest RD schemes are a smart step in disciplined financial planning.
📢 FAQs: High Interest RD Schemes
Q1. Which bank offers the highest RD interest in 2025?
As of June 2025, Equitas Small Finance Bank offers up to 8.25% p.a.
Q2. Is Post Office RD better than bank RD?
Post Office RDs are safer (government-backed) but have limited tenure and slightly lower rates than some small finance banks.
Q3. Can I open multiple RDs in the same bank?
Yes. You can open multiple RDs with different tenures and amounts to meet various financial goals.
Q4. Are RD returns taxable?
Yes. Interest is taxable as per your income slab. TDS may apply if interest exceeds ₹40,000/year.