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 ny 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.
These accounts are normally allowed for maturities ranging from 6 months to 120 months. A Pass book issued where the person can get the entries for all the deposits made by him / her and the interest earned. Early withdrawal of accumulated amount permitted is usually allowed but penalty may be imposed for early withdrawals. These accounts can be opened in single or joint names. Nomination facility is also available.
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