Recurring Deposit Schemes for Children 2025

Recurring Deposit (RD) schemes for children offer several advantages that make them a reliable savings option for parents or guardians looking to build a secure financial future for their child.

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Investing small amounts every month in the form of recurring deposit is the best savings plan that parents can develop for their children. Starting from the time they join kindergarten to the time they graduate from a college, a recurring deposit would offer financial support to parents hoping to provide a bright future.

Banks across India offer multiple types of recurring deposit schemes mainly targeting children for fulfilling different purposes like school/college education, children’s education, marriage, etc.

Depending on the requirement, parents can avail the suitable recurring deposit schemes from any bank of their choice, making sure that they financially secure their child’s future in every possible way.

RD schemes for Children

Given Below are Some of the Best Recurring Deposit Schemes Available for Children.

Tamilnad Mercantile Bank-Kids RD Scheme

The Kids Rd scheme from Tamilnad Mercantile Bank offers complete financial support to meet the cost of higher education for children.

Customers can make small deposits every month and earn high returns when they require the funds. Accounts holders who make regular payments towards a Kid's RD scheme can easily get education loans sanctioned from Tamilnad Mercantile Bank.

The minimum tenure that has to be taken by customers in one year with maximum being up to ten years. Parents can start saving with a minimum amount of Rs. 58, with no cap applied on the maximum amount.

The minimum target sum is Rs. 10,000, with no cap applied on the maximum amount. The interest rates offered by Tamilnad Mercantile Bank for recurring deposit amounts up to Rs. 15 lakhs ranges from 5.80% to 7.80%. The interest rate varies according to the tenure chosen by the customer.

ICICI Bank - Child Education Plan

Parents availing the Child Education Plan from ICICI Bank can start investing small amounts from the time their kids are in kindergarten.

The recurring deposit contributions have to be done for a small period and account holders can enjoy payouts for the entire tenure of the deposit. The account can be opened in the name of the minor by a parent or guardian.

The deposit tenure options available vary from 4 years to up to 10 years and the investment tenure is for 3 years, which can be increased in multiples of three months. The minimum deposit amount required is Rs. 500, which can be increased in multiples of Rs. 100.

The Child Education Plan can be funded from the parent’s ICICI Bank Savings Account or through cash or cheques. Customers can earn interest on the deposits done during the Investment phase with payouts happening to the minor’s Youngstar Savings Account on a quarterly or annual basis.

The minimum tenure of the payout phase is 1 year and then in multiples of 1 month. The other features available with the Child Education Plan are loan on deposits, premature closure, partial withdrawals and nominations.

The documents that have to be submitted while opening the Child Education Plan account are - Applicant’s photo, ID Proof, Proof of relationship, Address proof, date of birth proof for the minor and a self cheque.

For deposits amounts below Rs. 1 crore, the interest rate varies from 7.25% to up to 7.50%. For deposits amounts of Rs. 1 crore and above, the interest rate varies from 7.35% to up to 7.60%.

Punjab National Bank-Bal Vikas Deposit Scheme

The PNB Bal Vikas Deposit Scheme has been offered by Punjab National Bank to plan future expenses in relation to children’s education. This plan is provided as a combination of an Income cum Fixed Deposit scheme and a recurring deposit scheme. The minimum recurring deposit amount required every month is Rs. 1000, which can be incremented in multiples of Rs. 500 during the first five years of the deposit tenure.

The recurring deposit scheme can be taken for five years and the Income option Fixed deposit can be taken for an additional five years. Income options available to deposit holders are either quarterly or monthly. The total tenure of the Bal Vikas Deposit Scheme will be up to 10 years. The interest rates offered on the Bal Vikas Deposit Scheme is as per CARD rates and will be compounded on a quarterly basis. The current interest rate for the Bal Vikas Deposit Scheme is 8% per annum for the 10-year period.

Sutex Bank-Kanya Utkarsh and Children's Growth Plan

The Kanya Utkarsh and Children Growth Plan is a recurring deposit scheme that can be availed by Sutex Bank customers for securing the future of their girl children. The interest rates offered on the Kanya Utkarsh and Children Growth Plan ranges from 7.50% to 8.00%, for deposit tenures from 6 months to up to 7 years.

FAQs on Recurring Deposit Schemes for Children

  • What is the Children's RD Account Minimum Deposit Amount?

    Each bank has a different minimum deposit requirement, and children's RD accounts could have different requirements. Since it's usually a small sum, parents can start saving for their child's future with ease. 

  • What Advantages Do Children's RD Accounts Offer?

    Children's RD accounts typically have a few advantages to adult RD accounts, like greater interest rates. Some banks may provide additional incentives or presents for opening these accounts, and they can also have flexible tenure choices to meet the child's future needs. 

  • Can I Open an Account for My Child to Make Recurring Deposits?

    Yes, a lot of banks and financial institutions have kid-specific recurring deposit plans. On behalf of their children, parents or legal guardians can open these accounts. 

  • Are RD Accounts for Children Taxable?

    Income tax is levied on the interest accrued on children's RD accounts. However, under Section 10(32) of the Income Tax Act, there can be provisions for tax exemption up to a specific threshold. If you have specific questions about taxes, it is advisable to speak with a tax professional or financial advisor.

  • Who ought to make recurrent deposit investments?

    For those who are salaried, investing in RDs is an excellent option because they do not require a big sum investment like fixed deposits do. The investor merely needs to set aside a certain portion of their monthly income for RD investments. 

  • Is long-term RD beneficial?

    Because they guarantee returns and give greater interest rates than other safe investment options, long-term recurring deposits are well-liked. Many investors favour them because of their reputation for dependability and security. 

  • Is It Possible to Withdraw Funds Before the RD Maturity Date?

    Withdrawing funds from an RD account before the maturity date could result in fees and/or a decreased interest rate for the depositor. Certain restrictions and fines may apply to premature withdrawal options provided by some banks. 

  • Can I Extend My Child's Account's RD Tenure?

    If you want to continue saving for a longer period of time, you can often extend the RD tenure for your child's account. Depending on the bank or financial institution, different terms and conditions may apply to extensions. 

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