What Is a Recurring Deposit (RD)?

With an RD, you commit to depositing a fixed amount every month for a chosen tenure (commonly 6 months to 10 years), earning FD-like interest on the accumulating balance, with the full amount plus interest paid out at maturity. The key difference from a Fixed Deposit is simply when the money goes in: an FD needs the whole lump sum upfront, while an RD builds it up through monthly contributions - functionally similar to a standing instruction that automatically debits your account each month. It suits someone with a steady monthly income and surplus but no existing lump sum, as a structured, contractual way to build savings discipline, though - like an FD - premature withdrawal typically comes with a similar interest penalty.