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SBI Fixed Deposit or Recurring Deposit- Which one should you choose?


SBI Fixed Deposit or Recurring Deposit- Which one should you choose?

When it comes to FDs (Fixed Deposits) and RDs (Recurring Deposits) at State Bank of India (SBI), the country’s biggest lender, investors have always been confused as to the one to opt for. For those who are looking to earn safe and secure returns, FDs have always been the first point of call! State Bank of India requires a minimum FD amount of Rs. 1, 000 although there is no limit on the maximum amount that you can deposit. The maturity period usually ranges from 7 days to 10 years on FDs and premature withdrawal facilities are also available for these accounts. Interest rates are usually 0.50-1% lower than the applicable rate at the time of depositing the amount for the period that the deposit remains with the SBI or 0.50-1% lower than the contracted interest rate whichever turns out to be lower. However, there is no interest paid out on deposits held for less than a period of 7 days.

For deposits lower than Rs. 1 crore, the interest rates are 5.75% and 6.25% for general customers and senior citizens respectively in case of maturity periods between 7 and 45 days. For tenors between 46 days and 179 days, the interest rates are 6.25% and 6.75% for general and senior citizens respectively while they are 6.35% and 6.85% respectively for tenors between 180-210 days. For durations between 211 days to less than a year, rates of interest stand at 6.4% and 6.9% for general and senior citizens respectively while they are 6.7% and 7.2% for tenors between 1 year and less than 2 years. For 2 years to less than 3 years, general and senior citizens get interest rates of 6.75% and 7.25% respectively. They also get 6.8% and 7.3% respectively in case of tenors between 3 years and less than 5 years. For periods of 5 years up to 10 years, interest rates are 6.85% and 7.35% for general and senior citizens respectively.

Recurring deposit accounts with SBI require a minimum monthly instalment amount of Rs. 100 and the amount and number of RD instalments are not changeable post opening of the RD account. There is no maximum deposit limit at SBI and the maturity amount is determined by several factors like the tenor of the RD, instalment, type of account chosen by the customer and so on. The maturity value of the RD is rounded off to the nearest rupee. It is paid out post 30 days/1 month deposit of the last instalment or period expiry whichever comes later. There is a service charge imposed for RD accounts which is paid on or post the maturity date whenever there are payment defaults for 3 or even more instalments minus regularization of the account. Service charges of Rs. 10 are imposed on these accounts post maturity or during payment. SBI allows premature withdrawals from its RD account and interest rates are the same as FDs.

Now, if you are looking for a safe and secure long-term investment to fund goals, you can consider FDs and if you are looking to earn quicker returns in a shorter time period, i.e. 1-2 years through faster compounding, you can try RDs at SBI.


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