How Recurring Deposit Maturity Is Calculated

A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount every month for a predetermined period. Unlike an FD where you invest once, an RD builds savings gradually — making it ideal for salaried individuals who want to save a portion of income each month. Banks compound RD interest quarterly in India, and the RBI mandates this calculation method for all scheduled commercial banks.

RD Maturity Formula

The maturity value of an RD with quarterly compounding is:

A = P × [(1 + r/4)^(4t) − 1] ÷ [1 − (1 + r/4)^(−1/3)]

Where P is the monthly deposit amount, r is the annual interest rate (decimal), and t is the tenure in years. Each monthly installment matures at a different point, so the total is a sum of all installment future values.

Worked Example

You open an RD depositing ₹5,000 per month for 5 years at 7% per annum (quarterly compounding).

Compare this to a savings account at 3.5%: the same ₹3 lakh deposits would earn only ₹28,000 in interest — less than half. RDs are particularly effective for goal-based saving, such as building a down payment or an emergency fund over 1–5 years.