Bank of India Recurring Deposit Interest Rates

If you are considering investing in a recurring deposit, you are probably looking to save up gradually and earn interest alongside, even as you continue to add to your investment capital. The idea that the investment capital can be gathered bit by bit, month by month and installment by installment, alongside the proposition of receiving interest from the very first chunk of capital, is appealing to a lot of investors. 

Banks too enjoy the idea of receiving a steady stream of capital from investors and thus, because of favorable demand and inherent appeal for both parties, almost all banks offer recurring deposits (RDs). 

However, despite being a market-wide product, the interest paid out by banks is far from the equal market-wide. That is why it makes sense to look at the interest rates on offer by various before zeroing in on a particular bank, just like you’re probably doing right now. As promised, here are the Bank of India RD interest rates expected in 2022 but stick around after, because you should use other criteria and considerations to pick recurring deposits easily, not to mention tools at your disposal and the whole buffet of benefits you can get with your recurring deposit. 

Bank of India RD interest rates 

• 180 days to 269 days                             4.35 3.25
• 270 days to less than 1 year                 4.35 3.25
• 1 Year & above but less than 2 Yrs     5.00 3.50
• 2 years & above to less than 3 years  5.05 3.50
• 3 years & above to less than 5 years  5.05 3.50
• 5 years & above to less than 8 years  5.05 3.50
• 8 years & above to 10 years                 5.05 3.50

Additional points to note about the Bank of India term deposit. 

• The website mentions that no interest will be paid on RDs prematurely withdrawn in less than 3 months. 
• The minimum amount for RD installments is Rs 500 in BOI’s urban branches and Rs 100 in its rural branches. 
• Payment of a given month’s installment has to be made on or before the last working day of the month. 
• Bank of India pays out compound interest on a quarterly basis. 
• The tenures of recurring deposits are accepted in multiples of three. 
• Arrangements have been made to accomodate recurring deposits from blind investors and minors. 

How to pick recurring deposits. 

• Check interest rates being offered by various banks, first and foremost. 
• Check the minimum installment amount to be sure that it is affordable for you. With some banks the minimum installment amount might be as low as Rs 100. 
• Also compare the fees and charges being levied by banks. Some banks might offer a competitive rate of interest, but what you earn might be dented by what you pay the bank by way of fees, service charges and so on. 
• Once you have the above two percentages, use an RD calculator to get the actual amount of interest you will earn, or exactly how many rupees you will earn as interest. Similarly convert the fees and charges percentages to rupee amounts. Now deduct the fees and charges amount from the interest amount and draw up a comparison between a handful of scheduled banks. Choose the one offering you the most competitive rate. 
• If you already have recurring deposits or substantial capital investment in the bank offering you the most competitive rate, you may want to consider picking the second in line to reduce capital risk by spreading it across multiple banks. 
• Do your research on penalties. For example BOI’s website states that “penalty will be charged at Rs 1.50 for every Rs.100 per month installment (on RDs of 5 years tenure and less) and Rs 2 for RDs of more than 5 years tenure. Some banks might charge a lower penalty than this. However BOI might waive off the penalty if the depositor happened to have also made advance payment on the same number of delayed installments. Compare such penalties and convenience across different banks. 

In case of premature withdrawal, “the applicable rate of interest on the date of acceptance of deposit for the actual period in which the deposit has remained with the bank or contracted rate of interest whichever is LOWER shall be applicable.”

Did you know about these pros and cons of RDs? 

Pros:

You can get a loan or overdraft facility against your RD

You get tax deductions under section 80C of the income tax act

Cons:

If you do not pay the minimum installment amount on an RD, you have to pay penalties, which eat into your earnings

Although RDs offer a fixed income, the returns pale in comparison to mutual funds and stock market-related investments that demand a risk appetite

Conclusion:

Bank of India offers competitive rates for RDs. Recurring Deposits could be just the low-risk, fixed-income, minimal upfront capital investment that you’re looking for to balance your risk, or to jump start your investment journey, or even to help ease you into a comfortable retirement. Do your research to choose wisely.