You must have heard of a recurring deposit, but did you know that you can also open a flexi recurring deposit account? Let’s understand what a flexi RD is.
A ‘flexi recurring deposit’ is a more convenient savings instrument for people who do not have a similar income every month. There are two sections in a flexi RD -
The core amount, which is deposited by the customer while opening the flexi RD
The flexible amount, which can change based on the funds available to the customer
The core amount is deposited with a tenure in mind. The rate of interest will depend on this tenure, amount, and the bank’s interest rates for flexible recurring deposits.
The variable amount is deposited every month, adding to the existing core amount in the account. If the core amount is not deposited within the pre-determined date, a penalty will be charged by the bank.
After learning what is a flexi recurring deposit, let us look at its features and benefits -
The amount to be deposited is not fixed in this type of recurring deposit
When you have more funds available to you, you can deposit a higher amount than the core promised amount
The flexible amount can be deposited at any date during the month and no penalty is charged even if you don’t deposit it
It is great for entrepreneurs or any other professional who do not earn a fixed income every month
There is a limit to the flexible amount set by the bank which cannot be exceeded by the customer
The rate of interest is calculated on the core amount as per the rates of the bank
The interest on the flexible amount is calculated from the date it is deposited
Premature withdrawals and loan facilities are available just as in regular recurring deposit accounts
Like other RD accounts, it can be auto-renewed at the end of the tenure
Flexi RDs are a great investment tool given the liquidity and high returns they offer to customers. However, the tenures, rates of interest, and amounts vary depending on the bank you choose to open a flexi RD account.
Here are some major banks and the basic features of their flexi RD accounts -
Name of Bank Flexi RD Scheme | Rate of Interest | Tenure | Amount |
---|---|---|---|
SBI - e-SBI Flexi Deposit Scheme |
As applicable to term deposits |
5 - 7 years |
Rs.5,000 to Rs.50,000 in a financial year |
HDFC Bank - My Passion Fund |
4.50% - 7.00% |
6 months - 10 years |
Rs.1,000 to Rs.14,99,900 per month |
ICICI Bank - iWish flexible Recurring Deposit |
3.50% - 5.35% |
Any |
Any |
Central Bank of India - CENT Swa-Shakti Flexi Recurring Deposit Schemes |
3.50% - 6.40% |
6 months - 120 months |
Rs.100 - Rs.1 Lakh |
Bank of Baroda - Yatha Shakti Jama Yojana |
As per the maturity period of the deposit |
12 months - 120 months |
Rs.100 - Rs.10,000 per month |
Note: Rates mentioned as of 11th March 2024, and can be revised by the bank without any notice. Please check with the bank before opening an account.
Both flexi RDs and regular recurring deposits are great investment tools for the flexibility they offer. But here are some differences between flexible recurring deposits and regular recurring deposits -
You need to pay a fixed amount on a fixed date for a regular RD. However, in the case of a flexi RD, you can invest an amount up to twice the base amount. This variable amount can be deposited at any time of the month.
Missing a payment for a regular RD may attract a penalty. If you do not pay the variable amount in a flexi RD, no penalty will be charged.
A flexi recurring deposit has many benefits over a regular RD. If you are an entrepreneur and have some extra funds during a particular month, a flexi RD gives you the freedom to invest it in the same RD that you have been maintaining.
However, you need to remember that in most cases, the promised rate of interest will be calculated on the base or core amount that you pay while opening the account. This is the amount you pay every month on a stipulated date.
The interest on any extra variable amount that your deposit will be calculated from the day it was deposited. Thus, this comes with the possibility of investing the amount at any time of the month.
The terms and conditions of flexi recurring deposits will vary depending on the bank that you choose.
Whether the regular RD or a flexi RD is better for you will depend on your preference, income, and saving style. A flexi RD does give you more flexibility in terms of the amount you can invest, as compared to a regular RD.
No, you cannot partially withdraw funds from a flexi recurring deposit. You can either close the whole RD or look for loan options on the RD funds.
Yes, you can skip an RD installment. Depending on the rules of your bank, you might have to pay a penalty for one missed payment. If you miss more consecutive payments, your RD account might be closed by the bank.
The minimum deposit for SBI Flexi is Rs.5,000 per financial year.
You can earn an interest between 3.50% - 5.35% on your ICICI Bank flexible RD. The iWish flexible recurring deposit gives many benefits including no cap on tenure or amount.
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