Joint Recurring Deposit (RD) – Shared Savings, Shared Goals
A Joint Recurring Deposit (RD) allows two or more individuals to open and manage a single recurring deposit account together. This type of account is ideal for families, couples, business partners, or joint investors who wish to save systematically toward a common financial goal.
What is a Joint Recurring Deposit?
A Joint RD account is similar to a standard recurring deposit, except it has multiple account holders instead of one. The deposit amount, interest rate, and tenure are the same as a regular RD. The key difference lies in ownership rights, nomination, and operation instructions.
Typically, joint RDs can be opened in formats such as:
- Jointly (all holders must act together)
- Either or Survivor (any one holder can operate the account)
- Former or Survivor (the first holder operates; survivor receives proceeds)
Features of a Joint RD Account
- Number of Holders: Usually up to two or three individuals.
- Deposit Tenure: Typically ranges from 6 months to 10 years.
- Deposit Frequency: Monthly deposits with a fixed or variable amount.
- Interest Rate: Same as individual RDs, compounded quarterly.
- Joint Operation: Account operation based on the mode selected (jointly or either/survivor).
- Nomination: One nominee can be added for the joint account.
- Premature Withdrawal: Allowed with consent of all account holders (in joint mode).
Benefits of Opening a Joint Recurring Deposit
- Shared Financial Discipline: Encourages joint saving habits between spouses, partners, or family members.
- Goal-Based Saving: Perfect for saving towards shared goals like a vacation, home purchase, or child’s education.
- Equal Ownership: Both (or all) account holders enjoy rights over the deposit.
- Ease of Operation: “Either or Survivor” option simplifies access if one holder is unavailable.
- Assured Returns: Interest rates are fixed and not subject to market fluctuations.
- Safety: RDs are bank-backed instruments insured under DICGC up to ₹5 lakh per depositor per bank.
Eligibility Criteria
- Any two or more resident individuals can open a joint RD account.
- Minors can be included (with a guardian).
- Senior citizens can also open joint RDs with family members.
- Both individuals must fulfill KYC requirements with valid ID and address proof.
Documents Required
- Identity Proof: PAN Card, Aadhaar, Passport, or Voter ID of all holders.
- Address Proof: Aadhaar, utility bill, or rent agreement.
- Photographs: Passport-sized photos of all account holders.
- KYC Form: Completed as per the bank’s policy.
- Account Mandate: Operation mode declaration (Jointly / Either or Survivor / Former or Survivor).
How to Open a Joint Recurring Deposit Account
- Visit your bank branch or use its online banking platform.
- Select Joint RD option under the Recurring Deposit section.
- Choose deposit amount, tenure, and frequency.
- Submit KYC documents and operation instructions (jointly/either-survivor).
- Add nominee details using Form DA1.
- Deposit the first installment to activate the account.
Nomination Rules for Joint RD Accounts
- Only one nominee is allowed per account.
- Nominee receives proceeds upon the death of all joint holders.
- Nomination can be changed or cancelled anytime by all account holders together.
Taxation on Joint RDs
- Interest earned on RDs is taxable under “Income from Other Sources.”
- TDS (Tax Deducted at Source) applies if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.
- The tax liability is divided based on each holder’s share in the deposit (if defined).
FAQs on Joint Recurring Deposit
- How many people can open a joint RD account?
Generally, up to two or three individuals can jointly open an RD, depending on the bank’s policy.
- Can a joint RD be operated by one person alone?
Yes, if the account is opened under “Either or Survivor” mode, any one holder can operate it.
- What is the procedure if one of the joint RD account holders passes away?
In an “Either or Survivor” account, the surviving holder continues the RD. In “Jointly” operated accounts, the survivor can claim funds with necessary documentation.
- Can a joint RD have more than one nominee?
No, banks allow only one nominee per account under current RBI rules
- Can I convert an individual RD into a joint RD?
No, conversion isn’t typically allowed. You’ll need to close the existing RD and open a new joint one.
- How is interest credited in a joint RD?
Interest is calculated on the cumulative balance and credited to the joint RD account at maturity.
- Who is responsible for taxes on a joint RD?
Tax responsibility is usually shared proportionally based on each holder’s contribution or as mutually agreed.
- Can we prematurely close a joint RD?
Yes, but all joint holders must consent for premature withdrawal if the account is in joint mode.
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