SBI vs HDFC Bank vs ICICI Bank: Which bank offers best interest rates for recurring deposits

A recurring deposit can be a simple and easy option to help you save up for short- and mid-term goals. In such accounts you typically put in a fixed sum every month for specified length of time - ranging from six months to up to 10 years, but varies from bank to bank - and bag a much more attractive interest rate compared to your savings account. It's a good way for novices to inculcate an investing habit.

Here's a look at the options on offer by the leading banks in the country:

SBI

Deposit amount: Minimum monthly deposits of Rs 100 or more in multiples of Rs 10 with no cap

Minimum tenure: 12 months

Maximum period: 120 months (10 years)

Interest rate:

SBI, in association with Thomas Cook India, also offers a special recurring deposit aimed to help you save for vacations: The SBI Holiday Savings Account. The tenor for this product is fixed at 12 months and the amount is decided by Thomas Cook based on the package chosen by the customer. The interest rate offered is the same as for term deposits. At the end of a year, the maturity proceeds will be transferred to the tour operator to pay for your pre-selected holiday package. The best part here is that Thomas Cook will fund the 13th installment to purchase your package.

HDFC Bank

Deposit amount: Minimum investment of Rs 1,000 per month or in multiples of Rs 100 thereafter going up to Rs 14,99,900 per month.

Minimum tenure: 6 months

Maximum period: 10 years

Interest rate:

ICICI Bank

Deposit amount: Minimum deposit is Rs 500 per month and multiples of Rs 100 thereafter

Minimum tenure: 6 months

Maximum period: 10 years

Interest rate:

ICICI Bank also offers a unique online product called the iWish flexible Recurring Deposit where you create goals to save for your dreams, be it travel, education, gadgets or weddings. What's more you can put in any amount, starting with just Rs 50 for the first instalment, as many times in a month as you wish with no penalties for missed deposits.

Points to keep in mind regarding Recurring Deposits:

1. Most recurring deposits incur penalties for missed instalments so read the fine print carefully. Banks typically don't send reminders to pay due instalments.

2. TDS [tax deducted at source] may be applicable

3. Some banks, like SBI, also offer loan/overdraft up to 90% against the balance in the recurring deposit account.

(Edited by Sushmita Choudhury Agarwal)

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