A recurring deposit pays the same interest rate as a fixed deposit of the same tenure at most banks. State Bank of India says this in plain words: the rate of interest is the one applicable to term deposits. So the RD rate table is really the FD rate table. What changes is how much money is actually earning that rate, and that is where most readers get the sum wrong.
The spread between banks right now is a funding story. The RBI repo rate is 5.25% and was left unchanged at the August 2026 policy meeting. Big public sector banks have not needed to chase retail deposits, so their cards have sat still. SBI’s published card is still the one effective 15 December 2025. Small finance banks pay well above it because they need the money.
What are the current recurring deposit rates at SBI?
SBI applies its retail term deposit rates to recurring deposits. This is the card effective 15 December 2025, for deposits below ₹3 crore.
| Tenure | General public | Senior citizen | Applies to RD? | Effective from |
|---|---|---|---|---|
| 7 to 45 days | 3.05% | 3.55% | No — RD minimum tenure is 12 months | 15 Dec 2025 |
| 46 to 179 days | 4.90% | 5.40% | No | 15 Dec 2025 |
| 180 to 210 days | 5.65% | 6.15% | No | 15 Dec 2025 |
| 211 days to under 1 year | 5.90% | 6.40% | No | 15 Dec 2025 |
| 1 to 2 years | 6.25% | 6.75% | Yes | 15 Dec 2025 |
| 2 to 3 years | 6.40% | 6.90% | Yes | 15 Dec 2025 |
| 3 to 5 years | 6.30% | 6.80% | Yes | 15 Dec 2025 |
| 5 to 10 years | 6.05% | 7.05% | Yes | 15 Dec 2025 |
Source: SBI retail domestic term deposits page, sbi.bank.in, read on 7 September 2026. The 5 to 10 year senior rate includes a 50 basis point add-on under the SBI We-care scheme. SBI states its super senior Patrons benefit does not apply to recurring deposits, so read senior add-ons carefully.
What are the RD terms at SBI?
- Minimum instalment ₹100 a month, then in multiples of ₹10.
- Tenure 12 months to 120 months.
- Premature closure cuts the rate by 0.50% on principal up to ₹5 lakh, and by 1% above that.
- Miss an instalment and the penalty is ₹1.50 per ₹100 per month for a tenure of 5 years or less, and ₹2.00 per ₹100 per month beyond that.
- The penalty cannot exceed the interest paid to you.
- Six missed instalments in a row and the account is treated as defaulted.
All of these are from SBI’s own recurring deposit page, read on 7 September 2026.
Why is the interest on an RD so much lower than on an FD?
This is the misreading that matters. A 6.40% RD does not pay 6.40% on the total you deposit.
Only your first instalment earns interest for the whole tenure. The last one earns interest for a single month. On average your money is invested for a little over half the term. So the rupee interest is roughly half what a lump sum would earn at the same rate.
| Scenario | Total deposited | Approximate maturity | Interest earned | Interest if the same total was an FD at the same rate |
|---|---|---|---|---|
| ₹5,000 a month for 12 months at 6.25% | ₹60,000 | ₹62,060 | ₹2,060 | ₹3,839 |
| ₹5,000 a month for 24 months at 6.40% | ₹1,20,000 | ₹1,28,291 | ₹8,291 | ₹16,248 |
| ₹5,000 a month for 60 months at 6.30% | ₹3,00,000 | ₹3,53,091 | ₹53,091 | ₹1,10,070 |
Our workings, using quarterly compounding and the SBI rates in the table above. The FD column assumes you already had the full amount on day one, which is the point: if you have the lump sum, do not use an RD. Run your own numbers on the RD calculator or compare with the FD calculator.
The annualised return is still 6.40%. That number is not wrong. It is just answering a different question from the one most savers ask. An RD is a savings habit with a deposit rate attached. It is not a way to earn a deposit rate on money you already hold.
Which banks pay more than SBI on deposits?
Small finance banks do, consistently. Our deposit dataset as of 2 October 2026 shows Suryoday Small Finance Bank at 8.25% for the general public and 8.50% for senior citizens, against 6.50% at HDFC Bank and Axis Bank. Those are fixed deposit figures. Most banks apply the same card to recurring deposits, but not all of them do, and some restrict the best tenure buckets to fixed deposits only. Confirm on the bank’s own rate card before you open the RD.
A higher rate at a small finance bank is not free. Those banks pay more because they lend into higher-risk segments. Deposit insurance from DICGC covers ₹5 lakh per depositor per bank, principal and interest together. Keep each bank relationship inside that limit and the extra rate costs you nothing in risk. Go past it and it does. See DICGC deposit insurance and the full FD rate comparison.
How is RD interest taxed?
Interest on a bank recurring deposit is fully taxable at your slab rate. There is no exemption and no indexation. Banks deduct TDS under section 194A at 10% once interest across your deposits with that bank crosses ₹50,000 in a financial year, or ₹1,00,000 for senior citizens. Without a PAN on file, section 206AA applies a flat 20%.
TDS is not the tax. It is an advance against it. If your slab is 30%, a 6.40% RD nets about 4.5% after tax. That is the number to compare against inflation, not the headline rate.
Is a post office RD better than a bank RD?
Often, yes, on rate. The National Savings Recurring Deposit is a 5-year product notified by the Ministry of Finance every quarter, and small savings rates have generally sat above large bank deposit rates through this cycle. We are not quoting the post office RD rate here because we could not open the government notification directly; the India Post and NSI sites blocked our request. Check the current quarter’s rate on the notification before you commit. Our page on post office savings schemes covers the schemes we could verify.
The trade-off is liquidity and service. A bank RD is instant to open in an app and instant to close. A post office account is neither. If you are saving for a goal 5 years out, the rate wins. If the money might be needed sooner, read premature withdrawal rules first.
Frequently asked questions
Which bank gives the highest recurring deposit rate?
Among the banks in our dataset as of 2 October 2026, small finance banks top the table, with Suryoday at 8.25% for the general public. Those are the fixed deposit rates and most banks mirror them on RDs. Confirm the RD card specifically, because some banks exclude their best promotional tenure from recurring deposits.
Is a recurring deposit better than a SIP?
They answer different questions. An RD gives a contracted return with no market risk and full taxation at your slab. An equity SIP gives no guarantee and can fall, but has historically beaten deposit rates over long periods and is taxed as capital gains. For money you will need within three years, an RD is the safer instrument. For a goal ten years away, a deposit rate after tax and inflation is usually a losing position.
What happens if I miss an RD instalment?
At SBI the penalty is ₹1.50 per ₹100 per month for a tenure of 5 years or less, and ₹2.00 per ₹100 per month for longer tenures. The penalty cannot exceed the interest paid to you. Six consecutive missed instalments and the account is treated as defaulted. Other banks set their own penalty, so check yours.
Can I break an RD early?
Yes. At SBI the interest rate is cut by 0.50% for principal up to ₹5 lakh and by 1% above that, for all tenures. No interest is paid if the deposit ran under 7 days. Because an RD builds slowly, an early closure in the first year returns very little interest.
Does the RD rate change after I open the account?
No. The rate is fixed at the rate prevailing when you open the account and applies for the full tenure. A later rate cut does not touch you, and a later rate rise does not help you. That is different from a floating rate loan, where the reset does reach you.
Sources
- State Bank of India, retail domestic term deposit rates below ₹3 crore, effective 15 December 2025: sbi.bank.in
- State Bank of India, recurring deposit scheme terms, instalment and penalty rules: sbi.bank.in
- Reserve Bank of India policy rates: repo 5.25%, unchanged at the August 2026 meeting, next review 7 October 2026: rbi.org.in
- Cross-bank deposit rates (as of 2 October 2026) and TDS thresholds (as of 15 August 2026): our own datasets.
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