Definition of recurring deposit account with example
Answers
Answer: Recurring Deposit is a special kind of Term Deposit offered by banks in India which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits. A minimum period for an RD is 6 months and the maximum period is 10 years
Explanation: For example
Ram deposits INR 100 in the bank on the 24th of June, in his recurring deposit account. He has to deposit INR 100 every month on the same day, for 6 months, in order to keep his account open and to get the specified interest rate. The money cannot be withdrawn during the time period. If it is withdrawn during the time period, the interest is reduced. [This feature is similar to that of a fixed deposit account]