Short Term Recurring Deposit 2025

A short term Recurring Deposit is a scheme where the deposit can be for a relatively short period of time.

As the interest earned is identical to that earned by a Fixed Deposit without the strict rules that govern an FD, a short term Recurring Deposit makes for a balanced financial tool.

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Planning for Your Short-Term Goals Using Recurring Deposits

A Recurring Deposit, being a short term investment option, can be used by individuals who wish to save a certain amount of money for a specific goal or purpose. A Recurring Deposit helps you meet a short term goal as a fixed amount of money is set aside for the duration of the deposit, ensuring savings that are used to satisfy the goal.

For example, if a short term goal is funding the purchase of a car, you can work towards its achievement by planning your RD accordingly. The cost of the car would be the target figure, and the time frame could be the duration of the RD, for example in two years' time.

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A set amount would be deducted from your account every month towards fulfilling the set goal. On maturation of the tenure, the principal lump sum as well as the interest accrued on the amount would be available for withdrawal, thus ensuring the achievement of the goal.

With the interest rate being similar to that of a Fixed Deposit, you would stand to receive a sizeable sum of money as interest, which would reduce the amount you would need to deposit each month.

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Tenure for Short-Term Recurring Deposits

A short term Recurring Deposit tenure is, as the title suggests, of a shorter duration as compared to a regular Recurring Deposit. With the average Recurring Deposit tenure being around 4-7 years, a short term RD could be from as little as 6 months to around 4 years.

Recurring Deposit tenures vary from bank to bank, and comparing rates and tenures would enable you to make an informed decision regarding the RD best suited to your needs.

The minimum requirement for a short term Recurring Deposit varies from bank to bank, with some banks keeping the minimum amount at as little as Rs.10. Some banks have a minimum deposit amount of Rs.100 whiles others keep it at Rs.500.

The minimum amount could also differ if the RD is being opened by a senior citizen, in which case the amount could be relaxed or lowered.

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Eligibility Criteria for Short -Term Recurring Deposits

Individuals who wish to open a Recurring Deposit have to meet the eligibility criteria as defined by the specific bank. Individuals are also required to submit a set of documents for KYC compliance.

The list of documents are mentioned below:

1. Proof of identity.
2. Proof of address.
3. Recent passport sized photograph.

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Short -Term Recurring Deposit Interest Rates:

In an effort to simplify the process of looking for short term Recurring Deposit rates and their respective tenures for banks, a short list has been compiled below:

Short Term Recurring Deposit Interest Rates Table:

	ICICI Bank		SBI		HDFC		Axis Bank
Tenure	Reg	Sr Cit	Reg	Sr Cit	Reg	Sr Cit	Reg
3 months	-	-	-	-	-	-	-
6 months	4.00	5.25	-	-	5.75	5.75	6.25
9 months	6.00	6.50	-	-	6.00	6.00	6.50
12 months	6.70	7.20	6.80	7.30	6.60	6.70	7.20
15 months	7.25	7.80	6.80	7.30	7.10	7.25	7.75
18 months	7.25	7.75	6.80	7.30	7.25	7.25	7.75
21 months	7.25	7.75	6.80	7.30	7.00	7.20	7.75
24 months	7.25	7.75	7.00	7.50	7.00	7.10	7.60

Note: Interest rates are subject to change at the discretion of the bank. Applicants are requested to check for current applicable rate at the time of application.

Individuals can thus choose a Recurring Deposit based on the tenure as well as the interest rate being paid out to fulfill a goal or as a savings tool, allowing for a regular source of saving every month.

RD Interest Rates by Banks

1. Uco Bank RD Interest Rates
2. Central Bank RD Interest Rates
3. Federal Bank RD Interest Rates
4. Indian Bank RD Interest Rates
5. Kotak Mahindra RD Interest Rates
6. IOB RD Interest Rates
7. Citybank RD Interest Rates
8. Indusind Bank RD Interest Rates
9. BOM RD Interest Rates

RD Article Pages

1. Recurring Deposit Vs. Chit Fund
2. Miss to Pay the Recurring Deposit Due
3. Difference Between Recurring Deposit and SIP
4. Open RD Account through HDFC NetBanking
5. RD Account in SBI
6. Advantages of Recurring Deposit
7. Flexi RD
8. SBI Flexi RD Schemes
9. Monthly Recurring Deposit
10. Indian Bank Recurring Deposit
11. Union Bank Recurring Deposit
12. UCO Bank Recurring Deposit

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FAQs on Short-Term Recurring Deposit

• Can a minor open a short-term recurring deposit account?

  Yes, a minor can open a short-term recurring deposit account. 

• Can I redeem the deposit before maturity?

  Yes, the deposit can be redeemed before maturity. However, a penalty will be levied in case the deposit is redeemed before maturity. 

• Can nominees be added in case I open a short-term recurring deposit account?

  Yes, nominees be added in case I open a short-term recurring deposit account. 

• Do banks offer an additional interest rate to senior citizens?

  Yes, banks may offer an additional interest rate to senior citizens. 

• Is it possible to open a joint RD account?

  Yes, you can open a joint RD account. 

• Who can open an RD account?

  Any Indian citizen can open short-term RD account if they are an Indian resident or HUF (Hindu Undivided Families); an NRI can also open (through NRO and NRE accounts); and a minor under the guardianship of your parents is also eligible for opening RD account. 

• What penalties apply on missed RD payments?

  The bank may close your RD account if the depositor misses several consecutive payments. While some RD schemes are also flexible in the way they allow you to make payments anytime during the month. The bank allows a 1.00% penalty on the deposited amount or reduced interest rate which varies from one bank to another. 

• What can I do with my RD account after it matures?

  RD account can be closed and use the returns for personal needs after the RD account matures. Depositors can ask the bank to transfer the amount to an FD account for increased returns. 

• Are the documents required for opening short-term RDs different from that of other RD schemes?

  No, the documents required for opening short-term RDs are not different from that of other RD schemes. 

• Do the tax benefits vary for short-term and long-term RD schemes?

  No, the tax benefits offered for short-term and long-term RD schemes are the same. 

• What is a Short-Term Recurring Deposit (RD) ?

  A Short-Term Recurring Deposit is a type of savings scheme where depositors can deposit a fixed amount of money monthly for a short duration for a period ranging from six months to two years that offers guaranteed returns and interest is compounded quarterly. 

• What are the benefits of opening a Short-Term Recurring Deposit?

  The key benefits of opening a Short-Term Recurring Deposit include guaranteed returns, periodic savings, flexibility in tenure, and ease of managing finances. Provides better returns on your investment as the interest rates are generally higher than regular savings accounts. 

• Who is eligible to open a Short-Term Recurring Deposit account?

  The eligible candidates to open short-term recurring deposit account as per most of the Indian banks are minors (with guardians), senior citizens, and NRIs. The eligibility criteria may vary between banks, and hence it is recommended to check with your bank. 

• How do I open a short‑term RD account?

  Either by visiting your bank branch or through online banking platforms, depositors can open an RD account. For offline mode, depositors need to fill out an application form, provide necessary identification documents, and specify the monthly deposit amount and tenure. 

• What happens if I miss a monthly installment on my Short-Term Recurring Deposit?

  The maturity amount can be affected if depositor miss any installment as that would attract penalty. Some banks allow a grace period or options to make up for missed payments, which may vary as per the bank's policy on this.

• Can I withdraw my Short-Term Recurring Deposit before the maturity date?

  Yes, you can withdraw your short-term RD scheme before the maturity date, but it may come with penalties and lower interest rates. It is essential to understand these before opening an account, as the terms and conditions for premature withdrawal vary between banks. 

About the Author

Nishit Kunal

Nishit Kunal, currently working as an Editor has been with BankBazaar for over 5 years with expertise in writing on loan, credit cards, etc. When not working, Nishit dabbles between being a cinephile, writing, and playing with his dogs.