These kinds of deposits are most suitable for people who don’t have lump sum amount of savings, but are ready to save a small amount every month. Normally, such deposits earn interest on the amount deposited through monthly installments at the same rates as of Fixed Deposits / Term Deposits. These are best if one wish to create a fund for his child's education or marriage of his daughter or buy a car without loans.
Under these types of deposits, the person has to deposit a fixed amount of money every month any default in payment within the month attracts a small penalty. However, some Banks besides offering a fixed installment Recurring deposit, have also introduced a flexible / variable Recurring deposit. Under these flexible RDs the person is allowed to deposit even higher amount of installments, with an upper limit fixed for the same.
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