Recurring deposits are provided by banks to help people invest their money through regular monthly deposits and earn interest at applicable rates. The deposits made every month will mature on a specific date in the future. In fixed deposits, you invest a lump sum amount and so the money earns interest till it reaches its maturity. However, in recurring deposits, the first installment earns interest for a 12 month period, the second installment for 11 months and so on. Due to this difference, fixed deposits are able to earn higher returns. But when you are unable to make deposits in a lump sum, opting for a recurring deposit is the best way to make investments each month.
SBI Bank customers can make regular monthly investments by opening a recurring deposit. For example, you decide to deposit Rs. 1000 for 3 years at the current interest rate provided being 5.70% per annum. At the end of 3 years you will have a total saving of Rs. 36,329.46. The interest earned will be Rs. 3,329.