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A Recurring Deposit (RD) is a long-term investment plan wherein you make regular investments in a systematic scheme. These are small value amounts which allows the depositor to earn a pre-assured sum without any risk at the end of the maturity period. This is similar to Fixed Deposit scheme.

One of the major differences between recurring deposit and fixed deposit is that a recurring deposit allows you to make small investments on a regular basis whereas in a fixed deposit, one needs to make a huge lump sum amount for a specific period. You get similar interest rates as in fixed deposits.

Federal Bank Recurring Deposit Schemes

Federal Bank Recurring Deposit Rate

Federal Bank offers Federal Savings Fund which is a simple recurring deposit scheme to save small amounts of money on a monthly basis to help you achieve future goals like children’s education or marriage. The period and the instalment amount can be decided by the depositor. The bank also offers standing instruction facility and one can even avail a loan against the recurring deposit account.

Benefits of Federal Bank Recurring Deposit Account

  • One can make monthly investment of small amounts to save for the future
  • This suits perfectly for people with regular income or salaried basis
  • The bank has not kept any cap on the maximum amount for this recurring deposit scheme
  • Loan can be availed against this recurring deposit account
  • It is considered as a safe and low-risk investment option
  • Recurring deposit is protected from market fluctuations
  • Standing instruction facility can be availed if monthly tracking and payment of instalments become a tedious activity

Features of Federal Bank Recurring Deposit Account

  • The minimum deposit amount is only Rs. 50/- and additional contribution can be made in multiples of Rs. 10/-
  • Interest is calculated on a quarterly compounding basis
  • Interest cannot be withdrawn before maturity period
  • The minimum deposit period is 6 months and maximum is 10 years
  • One can track the recurring deposit account through internet banking
  • TDS is applicable on the interest paid/accrued on recurring deposit account
  • The Deposit holder can claim exemption from TDS by submitting Form 15G/15H
  • Additional interest rate of 0.50% for senior citizens of all periods for deposits less than one crore
  • The minimum tenure for investment is 7 days

Features of RD Xtra Gain

This recurring deposit scheme helps you save money on a monthly basis and moreover it helps you get a loan against your savings scheme. Following are the features of RD Xtra Gain-

  • You can avail a loan after 12 months against the recurring deposit
  • Loan amount is fixed based on 5 years’ recurring deposit instalments
  • Minimal documents required for income proof
  • You can cancel the recurring deposit after availing the loan
  • Only 6 prompt instalments in recurring deposit is required for existing Retail customers with good repayment history and Average Monthly Balance.
  • Customers need to remit only the same instalment amount even after availing the loan
  • Existing customers who have already remitted 12 instalments promptly are also eligible.

Federal Bank Recurring Deposit Interest Rates

The Recurring Deposit interest rate are similar to the Fixed Term Deposit rates. Federal Bank has laid out the currently applicable Resident Term Deposits rate which includes the Federal Savings Fund. These interest rates are subject to revision by the bank at their discretion. Hence, it is advisable to visit their website to check the updated rates.

The interest rates for Resident Term Deposits effective from 7th December 2018 is:

PeriodLess than Rs.100 Lakhs
7 days to 14 days3.50%
15 days to 29 days4.50%
30 days to 60 days5.00%
61 days to 90 days5.70%
91 days to 119 days6.00%
120 days to less than 1 year6.50%
1 year to 549 days7.30%
550 days7.50%
551 Days to 2 years7.30%
Above 2 years7.40%

Federal Bank Recurring Deposit interest rates for NRE Term Deposits

Federal Bank Recurring Deposit Rates
TenureInterest Rates p.a. for NRE
1 year7.30%
2 years7.30%
3 years7.40%
4 years7.40%
5 years7.40%
6 years7.40%
7 years7.40%
8 years7.40%
9 years7.40%
10 years7.40%

Federal Bank Recurring Deposit Calculator

Federal Bank offers an online Recurring Deposits Interest calculator on its website. A very simple tool to use to calculate the maturity amount on the basis of monthly deposit amount, interest rate and deposit tenure. It will show the matured amount with the total interest earned. Thus, giving you a fair estimate of your investment.

The tool helps in deciding how much you need to invest to arrive at a certain savings. You can try various combinations of deposits, interest rates and tenures to arrive at the figure desired by you. It can be used multiple times and is very helpful in achieving your financial goals.

Who can open a Recurring Deposit account with Federal Bank?

Federal Bank has laid out some guidelines on the category of people who can apply for a recurring deposit account:

  • Individuals
  • Individuals jointly with other individuals
  • For Minor Individuals by Guardian
  • HUF
  • Sole proprietary concerns
  • Clubs/Associations
  • Firms
  • Joint stock companies
  • Any other entity not prohibited by RBI

Advantages of Opening a Recurring Deposit account

  • Recurring deposits generally have high interest rates which is comparable to fixed term deposits
  • Most of the banks have simple documentation process for opening a recurring deposit account
  • Recurring deposit account is a very good option for those who do not want to invest a huge amount in a single go but can invest in smaller amounts on a continuous basis. This helps in maintain the liquidity in your financial portfolio
  • It is secure from market fluctuations
  • Most banks have very minimal amount requirement to start a recurring deposit account
  • One can earn a lump sum amount at the end of the tenure
  • There is flexibility in the tenure of the deposit to suit your convenience
  • Since the interest rate is fixed, one is assured of the returns
  • Some banks offer loan/overdraft facility with this account

Disadvantages of Opening a Recurring Deposit account

  • There could be penalty fee charged by the bank if you withdraw money before the end of the maturity period
  • In comparison to other investment options like mutual funds, the interest earned is low

Federal Bank Recurring Deposit FAQs

1. What are the documents required to open a recurring deposit account?

The following documents needs to be submitted for opening a recurring deposit account:

  • An application form
  • Proof of residence
  • PAN card
  • ID Proof
  • Photographs
  • KYC Documents

2. What is the minimum amount to put into a recurring deposit account?

One can start a recurring deposit account with a minimum amount of Rs. 50/-

3. How can one apply for a recurring deposit account?

If you are an existing customer of Federal Bank, you can open a recurring deposit account through Net Banking. If you are not a customer of Federal Bank yet, you will need to open a savings bank account first and then open a recurring deposit Account that is linked to this savings account

4. Is there a minimum period for recurring deposit account?

Yes, the minimum period for a recurring deposit account is 7 days.

5. Do I get overdraft facility with this account?

Yes, the bank offers overdraft facility up to 90% with this account

Federal Bank Recurring Deposit Rate - Customer Reviews

4 / 5 (2 Reviews)
9 Oct 2020

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