A recurring deposit (RD) is a systematic savings product offered by banks. You commit to depositing a fixed amount every month for a predetermined period (6 months to 10 years), and the bank pays you interest on the growing balance.
Example: You open an RD for Rs 5,000/month for 3 years at 7% interest. Total deposits: Rs 1,80,000. At maturity, you receive approximately Rs 2,00,000 — earning about Rs 20,000 in interest. The interest is compounded quarterly in most Indian banks.
RDs are perfect for people who cannot afford a lump sum fixed deposit but want to save regularly. They offer slightly lower interest rates than fixed deposits but build financial discipline. RDs are available at virtually every bank, post office, and cooperative society in India.