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Recurring Deposit
 
Recurring deposit account is opened by those who want to save regularly for a certain period of time and earn a higher interest rate.
In recurring deposit account certain fixed amount is accepted every month for a specified period and the total amount is repaid with interest at the end of the particular fixed period.

The main features of recurring deposit account are as follows:-

1.    The main objective of recurring deposit account is to develop regular savings habit among the public.
2.    In India, minimum amount that can be deposited is Rs.10 at regular intervals.
3.    The period of deposit is minimum six months and maximum ten years.
4.    The rate of interest is higher.
5.    No withdrawals are allowed. However, the bank may allow to close the account before the maturity period.
6.    The bank provides the loan facility. The loan can be given up to 75% of the amount standing to the credit of the account holder.

The advantages of recurring deposit account are as follows:-

1.    Recurring deposit encourages regular savings habit among the people.
2.    Recurring deposit account holder can get a loan facility.
3.    The bank can utilize such funds for lending to businessmen.
4.    The bank may also invest such funds in profitable areas.