Recurring Deposit for Senior Citizens

Several Banks offer Recurring Deposit for Senior Citizens for a tenure ranging from a minimum period of 6 months up to a maximum period of 10 Years. The tenure can be chosen by the depositor, in multiples of 3 months. Senior Citizens can avail special benefits on recurring deposit schemes, such as an additional interest rate of 0.25% to 0.75% over and above the regular interest rate offered by most banks. Once the amount of installment and tenure is fixed, it cannot be changed once the account is opened. Interest on the recurring deposit scheme is compounded on a quarterly basis.

The interest rate applicable on the recurring deposit is similar to that applicable on the Fixed Deposit, for a similar tenure. Financial institutions like Bank of India offers 0.5% additional interest rate on recurring deposit, compared to the fixed deposit available for the same tenure. Usually, the minimum recurring deposit amount can be a minimum of Rs 100 per month. However, this varies from bank to bank.

Defaulting on deposits can lead to penalty charges on your recurring deposit account and if there is defaulted payment of multiple installments, the bank at its discretion, can close the recurring deposit account and reimburse the investment to the depositor.

Several banks also offers loans against recurring deposit or offer an overdraft facility against the amount that is available in an individual’s Recurring Deposit account. In this case, the rate of interest applicable will be 0.5% - 1% more than the interest applicable on recurring deposit. Another factor is that, senior citizen recurring deposit accounts are also subject to a penalty fee if they make a premature withdrawal from the account.

Interest Rate on Senior Citizen Recurring Deposits