Investing in a Recurring Deposit (RD) is one of the safest and most predictable ways to grow your savings. If you deposit ₹20,000 per month in a State Bank of India (SBI) RD, you can accumulate a maturity amount of ₹14,19,818 in 5 years. This calculation assumes an interest rate of 6.50% per annum, compounded quarterly.
In this article, we will break down how SBI’s Recurring Deposit (RD) scheme works, how interest is calculated, and what you need to consider before investing.
SBI RD Interest Rates
| Feature | Details |
|---|---|
| Bank | State Bank of India (SBI) |
| Deposit Amount | ₹20,000 per month |
| Interest Rate | 6.50% per annum (compounded quarterly) |
| Tenure | 5 years (60 months) |
| Maturity Amount | ₹14,19,818 |
| Risk Level | Low (backed by SBI) |
| Official Website | sbi.co.in |
An SBI Recurring Deposit (RD) is a safe and reliable savings option for individuals looking to build wealth steadily over time. By depositing ₹20,000 per month for 5 years, you can accumulate ₹14,19,818 at 6.50% interest. If you seek secure, guaranteed returns, SBI RD is an excellent choice. However, if you want higher returns, explore alternative investment options like mutual funds, stocks, or fixed deposits.
What is an SBI RD Interest Rates?
An SBI Recurring Deposit (RD) is a fixed-income savings plan where you invest a fixed amount every month, earning interest at a predetermined rate. It is a great investment option for individuals who want to save regularly but do not have a lump sum to invest in Fixed Deposits (FDs).
Why Choose SBI RD?
- Guaranteed Returns – Unlike stocks or mutual funds, RDs offer fixed, predictable growth.
- Flexible Tenure – SBI offers RD schemes ranging from 1 year to 10 years.
- Quarterly Compounding – Interest is compounded every three months, boosting returns.
- Low Risk – Since SBI is a government-backed bank, there is no risk of losing your money.
SBI RD Interest Rates & Calculation
SBI offers different interest rates based on tenure and customer category (general citizens vs. senior citizens). As of 2024, the SBI RD interest rates are:
| Tenure | Interest Rate (General Citizens) | Interest Rate (Senior Citizens) |
|---|---|---|
| 1 Year to 2 Years | 6.80% | 7.30% |
| 2 Years to 3 Years | 7.00% | 7.50% |
| 3 Years to 5 Years | 6.50% | 7.00% |
| 5 Years to 10 Years | 6.50% | 7.50% |
Note: Interest rates are subject to change. Always check the SBI website for updated rates.
Formula for RD Calculation
The maturity amount (A) for a Recurring Deposit is calculated using the formula: A=P×((1+i)n−11−(1+i)−13)A = P \times \left( \frac{(1 + i)^n – 1}{1 – (1 + i)^{-\frac{1}{3}}} \right)
Where:
- P = Monthly Deposit (₹20,000)
- r = Annual Interest Rate (6.50% or 0.065)
- n = Number of Quarterly Periods (5 years × 4 quarters = 20)
- i = Quarterly Interest Rate = 6.50% ÷ 4 = 1.625% (or 0.01625 in decimal form)
Plugging in the values: A=20,000×((1+0.01625)20−11−(1+0.01625)−13)A = 20,000 \times \left( \frac{(1 + 0.01625)^{20} – 1}{1 – (1 + 0.01625)^{-\frac{1}{3}}} \right)
The maturity amount comes to ₹14,19,818 after 5 years.
Step-by-Step Guide to Opening an SBI RD Interest Rates
Want to start investing in an SBI RD? Here’s how you can do it:
Choose the Right Tenure
SBI offers RDs with terms ranging from 12 months to 120 months (1–10 years). Choose the tenure based on your financial goals.
Visit SBI Branch or Use Online Banking
You can open an RD account:
- Offline: Visit your nearest SBI branch with ID proof, PAN card, and bank account details.
- Online: Log in to SBI Net Banking or the YONO app and navigate to the Recurring Deposit section.
Set Up Monthly Auto-Debit
Link your savings account to automatically transfer ₹20,000 every month to your RD account.
Track Your Investment: Monitor your RD account regularly using SBI Net Banking or SBI YONO to check interest earnings and maturity value.
Withdraw Upon Maturity: At the end of 5 years, SBI will credit ₹14,19,818 directly to your linked savings account.
Pros & Cons of Investing in SBI RD Interest Rates
Advantages
- Stable Returns: No market risks like stocks or mutual funds.
- Compounded Growth: Earn interest on interest with quarterly compounding.
- Government-Backed: SBI is India’s largest bank with no risk of default.
- Flexible Tenure: Choose from 1–10 years as per your goal.
Disadvantages
- Lower Returns than Market Investments: Stocks and mutual funds offer higher long-term growth.
- Premature Withdrawal Penalty: If you close your RD early, SBI charges a penalty fee.
- Taxable Interest: RD earnings are subject to TDS (Tax Deducted at Source) if annual interest exceeds ₹40,000 (₹50,000 for senior citizens).
SBI RD Interest Rates (FAQs)
Can I withdraw my SBI RD before maturity?
Yes, but SBI will charge a penalty of 1% on the applicable interest rate. Withdrawals before 1 year do not earn any interest.
Is RD better than FD?
If you have a lump sum, FD offers higher interest rates. If you prefer monthly savings, RD is a better option.
How much tax do I pay on SBI RD interest?
SBI deducts 10% TDS (Tax Deducted at Source) if your total interest exceeds ₹40,000 per year (₹50,000 for senior citizens). If you fall in a higher tax slab, you must pay additional taxes.
Can I change my monthly RD installment?
No, once you set an amount (e.g., ₹20,000/month), it remains fixed for the tenure.
What happens if I miss an RD payment?
SBI may charge a penalty or prematurely close your account if you miss multiple payments.
