Q.Write a short note on: Recurring Deposit.

A recurring deposit is a deposit account in which a fixed amount is deposited every month for a fixed period, and the bank pays back the total deposits plus interest on maturity; it promotes the habit of regular saving.

Recurring Deposit

A recurring deposit account is opened by customers who wish to save a fixed amount regularly out of their monthly income. The depositor agrees to pay a fixed instalment every month for a chosen period (for example, 1, 2 or 5 years). Interest is paid at a rate usually higher than on a savings account and close to that on a fixed deposit. On maturity, the bank returns the total of all the monthly instalments along with the accumulated interest as a lump sum. The scheme is well suited to salaried persons and small savers because it builds up a sizeable amount from small, regular contributions and inculcates the habit of savin …