Recurring deposits (RDs), a fixed monthly investment tool offered by both banks and post offices in India, have seen varied interest rates for the October-December quarter of 2023. The post office's current RD interest rate stands at 6.7% for five-year investments, while private banks like HDFC Bank and Axis Bank offer higher interest rates of 7%. ICICI Bank offers an interest rate of 6.9%, with Canara Bank and Bank of Baroda at 6.75%.
To open an RD, one must be a resident Indian with the minimum monthly investment set at ₹100. Post office RDs, fully backed by the government, have no upper limit on the amount that can be deposited. On the other hand, bank RDs are insured up to ₹5 lakh per account holder through a deposit insurance program.
Premature withdrawal is allowed after three years in post offices, with an added benefit of being able to take loans of up to 50% of the balance after one year. Banks, however, offer more flexibility with no lock-in period but enforce penalties for premature withdrawals.
Both post office and bank RDs are considered safe investments, but post office deposits have added security due to full government backing. Despite this, banks offer operational convenience and additional interest rates for senior citizens.
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