Recurring deposit calculator

What an RD actually is

A recurring deposit is a fixed-term deposit that is funded in equal monthly instalments instead of a single lump sum at opening. Each deposit earns interest from the date it lands in the account until maturity. The bank applies the same rate and the same compounding rule to every instalment, but each deposit has a shorter earning window than the previous one, so the arithmetic is not the same as an FD.

Most public-sector banks and the Post Office apply quarterly compounding to an RD. A few private banks apply monthly compounding. The exact convention appears in the bank's product policy and in the schedule at the back of the deposit receipt. The page carries both as options because the gap on a long tenure can be a few hundred rupees.

The formula used on this page

The quarterly convention, used by most Indian public-sector banks, places each monthly deposit R at the start of month m and earns interest at a quarterly rate equal to the annual rate divided by four, for the remaining tenure measured in quarters. The maturity is the sum of those grown instalments across months 1 to n.

Formally, maturity equals R multiplied by the sum, from month 1 to n, of (1 plus rate divided by 400) raised to the power of (n minus m plus 1) divided by 3. When n is a multiple of three, this matches the published closed form: R multiplied by ((1 plus i to the Q power) minus 1), divided by (1 minus (1 plus i) to the minus one-third power), where i is the quarterly rate and Q is the number of quarters. The page uses the sum form so any month count works.

Worked example a reader can check

Put ₹5,000 a month into an RD at 6.5 per cent for 60 months, quarterly compounding. The quarterly rate is 6.5 divided by 4, or 1.625 per cent. The number of quarters is 20. The growth factor (1 plus 0.01625) raised to the 20th power is about 1.3804. The closed form gives R times (1.3804 minus 1), divided by (1 minus (1.01625) to the minus one-third), which works out to:

The gap between the two conventions here is roughly ₹330. On a ten-year, ₹10,000-a-month RD at 7 per cent, the gap is closer to ₹3,900. Not large, but worth knowing which rule the bank is actually applying.

RD against an FD of the same total

Suppose the saver already had ₹3,00,000 on day one, and placed it as a single FD at the same 6.5 per cent for five years with quarterly compounding. That FD would mature at about ₹4,14,126. The RD maturity on the same aggregate deposit is about ₹3,54,954. The gap of roughly ₹59,172 is the cost of drip-feeding: later deposits earn interest for less time than earlier deposits.

That comparison is not a mark against the RD. The product is designed for a saver who does not have the lump sum to start with. The alternative is not an FD of three lakh; it is no deposit at all until the three lakh accumulate, by which point the rate has often moved. The page shows both so the arithmetic is honest.

Tax position on an RD

Interest on an RD is treated the same way as interest on a bank FD. TDS applies under the applicable provisions of the Income-tax Act 2025 (corresponding to the earlier section 194A) once annual interest from the bank crosses ₹50,000 for a general resident or ₹1,00,000 for a senior citizen aged 60 or above, as of 1 April 2025. The rate is 10 per cent above the threshold where PAN is on file, 20 per cent where not.

Interest, at the return stage, is included in income under 'income from other sources' and is taxed at the depositor's slab rate. There is no separate deduction for an RD. A qualified chartered accountant can firm up the position for a specific case. DICGC cover of ₹5 lakh per depositor per bank, principal plus interest combined, applies to an RD on the same terms as an FD.

How each input moves the answer

The monthly deposit is linear: twice the amount gives twice the maturity at the same rate and tenure.

The rate works slightly less hard than on an FD, because the average dwell time of the money in an RD is about half the tenure. A move from 6.5 per cent to 7.5 per cent on the default lifts maturity by about ₹9,100, which is roughly 2.6 per cent of the maturity figure.

Tenure works doubly: more months means more deposits and more time for each. Extending from 60 to 120 months on the same ₹5,000-a-month at 6.5 per cent raises deposits from ₹3,00,000 to ₹6,00,000 and maturity from about ₹3,54,954 to about ₹8,44,940. Compounding needs runway to matter.

What this calculator leaves out

• Premature closure, where the bank pays interest at a lower slab for the actual tenure and may deduct a small penalty.
• A missed or late instalment. The page assumes every monthly deposit lands on schedule. A real RD typically charges a small penalty per missed instalment, often per ₹100 slab.
• TDS netted off the running balance. The page shows pre-tax maturity so the compounding itself is transparent.
• A senior citizen rate premium that some banks offer. Put the senior rate in the input if the bank publishes one.
• Variable-rate RDs or step-up RDs, where the rate or the deposit changes through the tenure. The page uses one of each.

Frequently asked questions

Courses that teach the subject behind the recurring deposit calculator