The State Bank of India’s Recurring Deposit (RD) Scheme allows depositors to save money over time by making regular monthly deposits of a defined amount. It also allows the depositors to have sufficient funds at the end of the tenure to accomplish their financial goals. SBI offers Recurring Deposits at interest rates of 7.00% to 7.50% pa to senior citizen depositors. It also offers interest rates of 6.50% to 6.80% pa to other depositors, with a minimum monthly deposit of Rs 100. The tenure for SBI RD ranges from 1 year to 10 years. In the RD scheme, investors are required to deposit money every month in their bank accounts. Depositors can invest Rs 5,000 in the bank every month and choose a tenure of 5 years for this investment. In this situation, the depositors will get interested at the rate of 6.50 per cent on the principal amount- of Rs 5,000. The compound interest on the principal amount every year will also increase. Therefore the investors will get an interest of Rs 54,957 after 5 years. Let’s take a look at SBI’s Recurring Deposit Interest Rates.
1 year to less than 2 years- Regular Rates (6.80); Senior Citizen Rates (7.30)
2 years to less than 3 years- Regular Rates (7.00); Senior Citizen Rates (7.50)
3 years to less than 5 years- Regular Rates (6.50); Senior Citizen Rates (7.00)
5 years and end up to 10 years- Regular Rates (6.50); Senior Citizen Rates (7.50)
Some of the other features of the SBI RD Account:
The account will be prematurely closed and the balance will also be paid to the account holder if six consecutive instalments are not paid.
Depositors can avail of the overdraft against the SBI RD account.
Penalties will be there for late payment.
Depositors can transfer their SBI RD account from one SBI branch to another.
Depositors get a universal passbook.
Nomination is available in favour of individual depositors only.
The RD account will also be taxable as per the Income Tax Act 1961 since it is an interest income.
SBI lets its depositors convert the RD into the Fixed Deposit upon maturity.
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