Recurring Deposit Account In Bank - Meaning and Features

What is Recurring Deposit Account ? Meaning ↓

Recurring deposit account is generally opened for a purpose to be served at a future date. Generally opened to finance pre-planned future purposes like, wedding expenses of daughter, purchase of costly items like land, luxury car, refrigerator or air conditioner, etc.

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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.

Features of Recurring Deposit Account ↓

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 upto 75% of the amount standing to the credit of the account holder.

Advantage of Recurring Deposit Account ↓

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 utilise such funds for lending to businessmen.
4. The bank may also invest such funds in profitable areas.

Related Articles On Banks ↓

1. Current Bank Account - Features and Advantages
2. Fixed Deposit Account - Meaning, Features, Advantages
3. Saving Account Bank - Meaning, Features and Advantages
4. How to Open A Bank Account ? 7 simple Steps to Open A Bank Account
5. What are the Advantages of Opening a Bank Account ?