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Recurring Deposit Calculator

Calculate the total maturity and interest from regular monthly bank deposits.

₹

Amount deposited every month

%

Bank interest rate p.a.

Months

Total investment duration (60 months = 5 years)

Quarterly Compounding

Indian banks calculate RD interest compounded quarterly on all monthly installments per Indian Banks' Association guidelines.

Results

Maturity Value
₹3,61,746
Total Invested₹3,00,000
Interest Earned₹61,746
Return on Investment20.6%

For information only. Not financial advice. Results are estimates.

How the RD calculator works

A Recurring Deposit (RD) is a disciplined savings scheme where you deposit a fixed sum of money every month over a predetermined tenure. Per Indian Banks' Association (IBA) regulations, commercial banks compound interest on recurring deposits on a quarterly basis.

Because contributions happen monthly while interest compounds quarterly, each monthly installment earns interest for the precise number of months it remains deposited until the maturity date:

M = Σi=1N [ P × (1 + r / 4)4 × (N − i + 1) / 12 ]

  • M — Total maturity value at the end of the tenure
  • P — Fixed monthly installment amount
  • r — Annual nominal interest rate expressed as a decimal (e.g. 0.07 for 7.0%)
  • N — Total number of monthly installments (e.g. 60 months for 5 years)
  • i — The installment sequence index (from 1 to N)

Worked example: ₹5,000 monthly for 5 years (60 months) at 7.0%

Consider an individual opening an RD account with a monthly contribution of ₹5,000 at a fixed 7.0% annual interest rate for 5 years:

1. Monthly deposit (P): ₹5,000

2. Number of installments (N): 60 months (5 years)

3. Cumulative principal invested: 60 × ₹5,000 = ₹3,00,000

4. Quarterly compounding mechanics: The 1st installment compounds across all 20 quarters; the 30th installment compounds for 10 quarters; the 60th installment compounds for 1 month.

5. Total maturity corpus: ₹3,61,746

6. Total interest earned: ₹3,61,746 − ₹3,00,000 = ₹61,746 (an effective 20.6% total return on deposited capital)

Interpreting your results

Guaranteed Capital and Returns: Unlike equity SIPs where maturity values depend on market cycles and sequence of returns, bank Recurring Deposits offer guaranteed capital protection and fixed interest rates locked at account inception. In India, bank deposits are insured up to ₹5,00,000 per depositor per bank by DICGC.

Tax Drag on Real Yield: RD interest is categorized as "Income from Other Sources" and taxed at your marginal income tax slab. For individuals in the 30% slab, a 7.0% nominal return yields an effective post-tax return of approximately ~4.9%, which may trail inflation.

Key assumptions and limitations

  • Quarterly Compounding Standard: Calculation follows the standard Indian Banks' Association (IBA) quarterly compounding schedule.
  • Prompt Installment Payments: Assumes every monthly installment is paid on the exact due date without default or payment delay penalties.
  • Fixed Interest Rate: The interest rate remains uniform throughout the entire contracted duration.
  • TDS Excluded: Displays gross pre-tax maturity value. Banks deduct 10% TDS (with PAN) if total interest earned across deposits in a financial year exceeds ₹40,000 (₹50,000 for senior citizens).
Debating between guaranteed bank deposits and mutual fund investing?Read our comparative guide on RD vs. SIP: Guaranteed Returns vs. Market-Linked Wealth Creation to examine taxation rules, post-tax real yields, and risk-adjusted return trade-offs.

Frequently asked questions

Can I change my monthly RD installment amount?
In standard recurring deposits with commercial banks and post offices, the monthly installment amount is fixed at account opening. Some specialized digital banks offer flexible RD accounts where contributions can vary.
Is Recurring Deposit interest taxable in India?
Yes. RD interest is fully taxable as "Income from Other Sources" at your applicable income tax slab rate. TDS applies if total annual interest across all deposits with a banking entity exceeds ₹40,000 (₹50,000 for senior citizens).
How is interest compounded on a Recurring Deposit?
Per Indian Banks' Association (IBA) guidelines, commercial banks compound RD interest quarterly. Each monthly installment earns interest compounded quarterly for its respective remaining tenure until maturity.
What happens if I miss an RD monthly installment?
Banks usually levy a nominal penalty (e.g. ₹1.50 to ₹2.00 per ₹100 per month) for missed installments. If installments remain unpaid for consecutive months (typically 4 to 6 months), the bank may prematurely deactivate the account.
Can I withdraw funds prematurely from an RD account?
Yes, premature closure is permitted by most banks, but it typically incurs a penalty of 0.5% to 1% reduction from the applicable interest rate for the period the deposit actually ran.

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Maturity Value

₹3,61,746