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Union Bank of India Recurring Deposit

A Recurring Deposit (RD) is where customers can deposit money to an account every month and earn an interest rate same as or similar to a fixed deposit. This is a very popular form of account in India since it gives the convenience of saving money for a planned expense while earning a higher rate of interest.

Recurring deposit is preferable to a fixed deposit since it allows for a regular monthly deposit as opposed to a lump sum deposit in case of a fixed deposit.

Union Bank of India Recurring Deposit Schemes

Union Bank Of India Recurring Deposit Rate

Recurring deposits are ideal for people looking to save small amounts of money on a regular basis. People can plan recurring deposits for lump sum expenses in the near future – like children annual school fees, insurance premium, down payment for large household goods, jewellery purchases, yearly festival shopping, etc. It helps them to conveniently set aside a small amount of money every month for the big expenditure.

Benefits of Union Bank of India Recurring Deposit Account

  • Union Bank of India has different recurring deposit schemes to suit different customers
  • Monthly instalments starting from as low as Rs.50
  • Tenure ranging from 6 months to 120 months
  • Higher rate of interest
  • Interest compounded quarterly and paid on maturity
  • Interest is compounded every quarter. The deposit matures one month after the payment of the last instalment.
  • Option to convert the maturity amount to fixed deposit provided the tenure of fixed deposit is longer than that of the recurring deposit
  • Passbook facility available
  • Nomination facility is available

Types of Union Bank of India Recurring Deposit Account

Union Bank of India offers two types of recurring deposit Account according to suit customer needs

Union Cumulative Deposit Scheme

  • Mainly aimed at lower/middle income groups
  • Advantageous for salaried individuals looking for a regular mode of saving
  • Monthly instalments starting from Rs.50
  • Offers tenure ranging from 6 months to 120 months
  • Passbook facility available
  • Nomination facility available
  • 0.50% additional interest for Senior Citizens

Union Monthly Plus

  • Exclusive recurring deposit scheme with Step-Up and Step-Down option
  • Option to choose a monthly instalment or ‘Core Amount’ between Rs.100 and Rs.1,00,000
  • During the tenure of the deposit scheme, the customer can increase the monthly instalment amount up to 10 times of the ‘Core Amount’ and continue paying that amount for the subsequent months
  • After stepping up, the customer can also ‘Step Down’ the monthly instalment in the subsequent months. However, the stepping down amount should not be less than the core amount
  • Interest will be calculated on a daily balance basis
  • Tenure ranging from 6 months to 60 months
  • Option to deposit more than one time in a month, subject to a maximum of 10 times per month
  • Premature closure allowed without any penalty charges
  • Loan facility up to 75% of the deposit amount allowed

Union Bank of India Recurring Deposit Interest Rates

Recurring deposit interest rates are the same as FD rates. The latest interest rates announced by Union Bank of India for deposits below Rs.1Cr are:

Union Bank of India Recurring Deposit Rates
TenureInterest Rate (per annum)
6 months – 10months6.50%
10 – 14 months6.75%
>14 months – 3 years6.70%
>3 years – 5 years6.85%
>5 years – 10 years6.85%

Senior citizens are paid a slightly higher interest rate for their recurring deposit accounts

TenureInterest Rate (per annum)
6 months – 10months7.00%
10 – 14 months7.25%
>14 months – 3 years7.20%
>3 years – 5 years7.35%
>5 years – 10 years7.35%

Who can open a Recurring Deposit account?

A recurring deposit account is similar to a term deposit in its functions and features. It is a simple account offered to all the customers of the bank. It is available for

  • All Indian residents – single accounts, two or more individuals in a joint account
  • Members of Hindu Undivided Families (HUF)
  • Associations, Clubs, Societies, etc.
  • Institutions and Agencies specifically permitted by RBI

Advantages of Opening a Recurring Deposit Account

  • A recurring deposit is the most viable option when you plan to set aside a fixed amount of money every month as against a lumpsum amount for a fixed deposit
  • A recurring deposit can be opened for as less as Rs.50 per month
  • The rate of interest is higher compared to ordinary savings bank accounts
  • Long and flexible tenures ranging from 6 months to 10 years to suit the needs of the customers
  • recurring deposits can be prematurely withdrawn for instant liquidity in case of emergencies
  • Union Bank of India offers various convenient modes of opening and operating recurring deposits – branch banking, online banking and mobile banking

Disadvantages of Opening a Recurring Deposit Account

  • Premature withdrawal, non-payment or late payment of monthly instalments attract penalty charges
  • Rate of interest is fixed for the entire tenure which prevents customers to avail an interest rate increase in case of market growth
  • Though the deposits are safe and earn an interest, the returns could be higher if invested in well planned mutual funds, SIPs or other market linked instruments

Union Bank of India recurring deposit FAQs

1. What is the minimum amount to open the Union Monthly Plus recurring deposit account?

The Union Monthly Plus recurring deposit account can be opened with a minimum amount of Rs.100.

2. What is the minimum and maximum tenure for Union Cumulative Deposit Scheme?

The minimum deposit tenure is 6 months and up to a maximum of 10 years.

3. How can I open a recurring deposit?

Union Bank of India allows you to open a recurring deposit from the convenience of your home through their internet banking platform – Union eBanking. In a few simple steps you can open a recurring deposit, linked to your savings bank account. You can select the desired monthly instalment and tenure. You can set the maturity instructions and standing instructions for the monthly instalments to be debited from your savings account.

Alternately, you can visit the nearest branch, fill up the necessary forms, submit KYC documents to open a recurring deposit account.

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

An existing customer of Union Bank of India can open a recurring deposit account without the requirement for KYC documents. If you are not an existing customer, then the following documents will be needed

  • Filled-in application form
  • Passport size photographs
  • Identity proof– Aadhaar card, passport, voter’s Id, driving license, job card issued by NREGA
  • Address proof - Aadhaar card, passport, voter’s Id, utility bills not more than 2 months old, property/municipal tax receipt, pension order issued to retired employees of government employees
  • Pan card/Form 60
  • Any other KYC documents as required by the bank

5. Is the interest earned on my recurring deposit taxable?

Yes, an interest above Rs.10,000 earned on a recurring deposit is taxable.

6. Can I prematurely withdraw my recurring deposit?

Yes, a recurring deposit can be closed prematurely which would attract a nominal penalty charge. However, Union Monthly Plus recurring deposit does not have penalty charges for premature closure.

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