How RD interest is calculated in India

A recurring deposit is a sequence of deposits, not one lump sum. Your first instalment earns interest for longer than your final instalment, so every monthly deposit has its own earning period.

The estimate in simple terms

For each instalment, an estimator needs four inputs:

1. the monthly deposit;
2. the annual interest rate;
3. how long that instalment remains invested; and
4. the compounding convention.

This site’s calculator estimates each instalment separately using quarterly compounding, then adds the maturity values together. The result is shown in Indian rupee formatting.

The result is an estimate, not a bank quote. Exact day counts, deposit timing, rounding and product terms can change the final amount.

Why two calculators may show different answers

Banks can use different disclosed methodologies for deposit interest. Differences often come from:

• whether an instalment is treated as paid at the beginning or end of a month;
• the handling of an incomplete final quarter;
• actual-day calculations and leap years;
• rounding at account or instalment level; and
• penalties for delayed or missed instalments.

The Reserve Bank of India has stated that banks may adopt their own deposit-interest methodology, provided they disclose it appropriately. Read the RBI guidance on deposit interest.

How to use an online RD estimate well

Use the calculator to compare scenarios—such as ₹5,000 versus ₹7,500 per month or a 0.50 percentage-point rate difference. Before opening the deposit, compare the result with your bank’s official maturity value and product terms.

The most useful number is often not the final rupee amount. It is the saving commitment you can sustain every month.