What is the Eligibility for an RD? Here's an Overview
5 min read | 5 months ago
What makes an RD (recurring deposit) special amidst the multitude of other investment products available today? It’s nothing but convenience, simplicity, and security (in that order). Now, going by the attractive RD interest rates in banks today, you must already be itching to open an account in order to bolster your savings. However, before you take the plunge, it is important to keep the eligibility criteria for these investments in mind. Let us first know more about recurring deposits before getting an idea of these guidelines.
What are RD Accounts?
For investors who wish to save a certain amount at fixed intervals, nothing works better than a recurring deposit. This is an investment where you put in money at regular intervals (6 months to 10 years) and earn interest accordingly. The recurring deposit account interest rate, while fixed, is mostly higher than savings account rates, and you can amass a significant amount at maturity to meet specific financial objectives. Now, let us know more about the eligibility criteria for these investments.
Are You Eligible to Open an RD?
Here are some aspects that will help you determine your eligibility for these investments.
Age Criteria
Most banks and financial institutions allow individuals above the age of 18 years to open an RD account. Some banks may also offer RD accounts to minors with the help of a guardian or parent. The maximum age limit may also vary from bank to bank. However, many institutions, like Unity Small Finance Bank, do not have any maximum limits.
Income Criteria
There is no fixed income that you should have in order to open an RD account. Anyone with proper income can invest in these accounts, although banks have varying minimum deposit requirements.
KYC Documentation
To open an RD account, you will need to submit KYC documents such as your Aadhaar card, PAN card, and address proof. This is a mandatory requirement and is aimed at preventing money laundering and fraud. The KYC process is simple and can be completed by submitting the required documents at the bank.
Account Type
RD accounts can be opened either as individual or joint accounts. In case of the latter, all account holders should be eligible to open RDs. For example, if you want to open an RD account with your spouse, both of you should meet the age and KYC guidelines. Now that you have an idea of the eligibility criteria, here are some additional aspects that you should not neglect.
Additional Aspects to Keep in Mind
It is crucial to choose the right tenure for your RD, keeping your short or longterm financial goals in mind. The maximum and minimum tenures may also differ across financial institutions. Now suppose you want to put up the down payment for a new car or take a vacation with your family, then you can choose tenures like 6 months or even 1-2 years. If you want to save funds for your child’s education, for instance, then you can select a tenure of 5-10 years. Also, the minimum deposit amount for an RD account may also vary from one bank to another. Some institutions, like Unity Small Finance, offer RD accounts with Rs. 1,000 as the minimum deposit amount. This ensures maximum convenience for every investor, since there is no need to begin with higher amounts straight away.
Conclusion
Of course, considering the current RD interest rates in banks, it is safe to say that these deposits are excellent investments for both the short and long-term. At the same time keeping an eye on the eligibility guidelines will help you open your RD account seamlessly at your chosen bank or financial institution. Note the abovementioned aspects carefully before applying.
FAQs
1. What is the minimum age requirement for opening an RD account?
The minimum age to open an RD account varies between banks but is typically around 18 years.
2. Is there any minimum limit for investing in an RD account?
Yes, there is usually a minimum limit for investing in an RD account, which varies between banks. It is typically Rs. 1,000 or above.
3. What is the tenure for a Recurring Deposit?
The tenure for an RD account can range from 6 months to 10 years, depending on the bank's policy.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
