Recurring Deposit (RD) is a popular savings instrument offered by banks and post offices that allows investors to deposit a fixed amount of money at regular intervals—usually monthly—and earn interest on it. It is a disciplined saving option ideal for individuals looking to build a corpus over time through systematic deposits.

In an RD, the interest rate is pre-determined at the time of opening the account and remains constant throughout the tenure. The tenure usually ranges from 6 months to 10 years. On maturity, the depositor receives the total principal amount along with the accumulated interest. The returns are compounded quarterly, helping investors benefit from the power of compounding.

One of the key benefits of a Recurring Deposit is its low-risk nature. Since RDs are not linked to market fluctuations, they provide stable and predictable returns, making them suitable for conservative investors. Additionally, most banks allow partial or premature withdrawals, though these may attract a small penalty. Investors can also avail loans against RD up to a certain percentage of the deposit value, offering liquidity without breaking the deposit.

RDs are particularly beneficial for salaried individuals and small savers aiming to achieve short- or medium-term financial goals such as funding education, vacations, or emergency reserves. However, the interest earned on RDs is taxable under the Income Tax Act, and TDS may apply if the interest exceeds the specified limit.

In summary, a Recurring Deposit is a disciplined and secure way to grow savings through regular contributions and fixed returns. It promotes financial planning, encourages savings habits, and helps investors achieve their goals without exposure to market volatility.