The recurring deposit account is subject to tax deducted at source, said SBI.
State Bank of India (SBI), the largest lender of the country, offers the option of opening a recurring deposit (RD) account that allows customers to save a fixed sum every month and earn an interest income on the same. Interest rates offered on recurring deposits (RDs) are the same as that on fixed deposit (FD) accounts, noted the lender on its corporate website- sbi.co.in. The difference is that in case of FDs, customers have to deposit the amount and keep it blocked until a fixed maturity period. While in case of RDs, customers can deposit the sum every month and thus RDs help them their build their savings through regular deposits.
Here are 10 things to know about SBI recurring deposit (RD) account:
- Customers are required to make monthly deposits of a minimum of Rs 100 and in multiples of Rs 10 in a SBI recurring deposit account. There is no maximum limit on the deposits.
- The minimum period of RDs is 12 months while the maximum is 120 months, according to SBI.
- The recurring deposit account is subject to tax deducted at source.
- A loan or overdraft up to 90 per cent is available against the balance in RD account.
- Premature withdrawal is allowed on RDs and for this, rules for fixed deposits (FDs) or STDR (special term or fixed deposits) are applicable.
- A nomination facility is available on RDs and it is advisable to avail this facility, stated SBI.
- Passbooks are also issued for RD accounts.
- SBI imposes the following penalty charges for non-deposit of monthly instalments in case of a RD account: for account of period five years and less - the bank charges Rs 1.50 per Rs. 100 per month and for account of period above five years- the lender charges Rs. 2 per Rs. 100 per month.
- A service charge is levied on recurring deposit accounts paid out on or after the date of maturity, wherein there is default in payment of three or more consecutive instalments and the account has not been regularized, according to SBI.
- In case six consecutive instalments are not received, the account is prematurely closed and balance is paid to the account holder. Instructions for disposal of maturity proceeds are accepted at the time of opening of accounts, said SBI.
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