Federal Savings Fund
Features & Benefits
Federal Savings Fund is a simple, yet brilliant recurring deposit scheme to save small amounts of money each month to plan for your future needs or to save towards a goal. You can choose any amount and term according to your convenience. If you feel it is tedious to make a monthly payment then we have the standing instructions facility. One can even avail a loan against the recurring deposit. What's more, you can also keep track of your deposit through Internet Banking.
TDS
- From June 1, 2015, Tax Deduction at Source (TDS) will be applicable on interest paid/ accrued on Resident Recurring Deposits.
- Deposit holder may claim exemption from TDS by submitting Form 15G / 15H (other than company, firm or co-operative society)/ Exemption Certificate under Section 197 (in case of all holders)/ or any other Tax Exemption Certificate with the Bank, subject to eligibility..
- Such form or tax exemption certificate has to be submitted every financial year for each recurring deposit held with the Bank.
How to open ?
Who can open?
- Individuals
- Individuals jointly with other Individuals
- For Minor Individuals by Guardian
- HUF
- Sole proprietary concerns
- Clubs/Associations
- Firms
- Joint stock companies
- Any other entity not prohibited by RBI
How to open?
- Opening a Federal Savings Fund Deposit is very easy. You can open the deposit either as online or offline.
- If you are having FedNet - Internet Banking account, please visit FedNet to open the deposit online.
- If you are having FedMobile, please login to the app & open a Recurring Deposit online.
- If you do not have Internet banking facility activated, please visit your branch for opening Federal Savings Fund deposit.
Interest Rates & Charges
- Please visit the Rates & Charges page for Savings bank interest rate.
- For Service charges and fees, please click here.
A Recurring Deposit is a well-known financial product for individuals keen on investing a fixed amount in the form of savings. A Recurring Deposit account allows one to invest a fixed amount every month for a specified period. At Federal Bank, the tenure ranges from 6 months to 10 years. At the end of the tenure, one receives the amount into their linked savings account along with the earned interest. Investing in a recurring bank account is a safe and hassle-free process.
How to open a Recurring Deposit Account?
Opening an RD account is relatively easy. One can open an account by visiting the nearest Federal Bank branch, or use online methods via FedNet or FedMobile app. An individual can also open an RD account through our bank’s virtual assistant, FEDDY that is available on various platforms such as WhatsApp, Alexa, Google Assistant and the corporate website.
Online Method
Below-mentioned are the steps to open an RD account online with Federal Bank:
- Step 1 - Download the FedMobile app on your mobile device
- Step 2 - Login to the app using your registered mobile number
- Step 3 - Next, click ‘Investments’ tab on the Home screen
- Step 4 - Click on ‘Bank Deposit’ under which choose ‘Recurring Deposit’ option and proceed
- Step 5 - Enter the investment amount of your choice, select a scheme and tenure
- Step 6 - Then, choose the date of monthly account debit, debit account and proceed
- Step 7 - Quickly review all the entered details and click ‘Confirm’
- Step 8 - Enter your mPIN to confirm the same and you’re done!
Offline Method
The offline process is pretty simple and is explained below for clarity:
- One must visit the nearest Federal Bank branch and fill up the Recurring Deposit Account opening form
- Also, carry along a cheque with the amount mentioned, to debit the account.
Eligibility Criteria & Documents required for Recurring Deposit
The eligibility criteria for opening a Recurring bank account with Federal Bank is as follows:
- There is no specific age criteria to open an RD account. For minors, however, the RD account needs to be opened by his/her guardian.
- An individual must possess valid documents such as proof of identity, address such as PAN Card, Aadhar Card, Driving License, Passport, Voter’s ID, NREGA Job Card duly signed by an officer of the State Government. Etc.
- A recent photograph
- Customer profile- The bank checks the social/financial status, nature of business activity, information about his clients' business and their location, the purpose and reason for opening the account, the expected origin of the funds to be used within the relationship and details of occupation/employment, sources of wealth or income, expected monthly remittance, expected monthly withdrawals etc.
- The minimum amount of deposit is Rs. 50 only along with additional contribution in multiples of Rs.100.
- There is no maximum amount criteria and an individual is free to invest any amount over Rs. 50 each month.
- The minimum deposit tenure is of 6 months and the maximum deposit period is of 10 years to invest in an RD account.
Features and Benefits of Recurring Deposit
Investing in a Recurring Deposit scheme is a smart move and we enlist the reasons below:
- Flexibility in Tenure: An individual investing in an RD account can choose a minimum tenure of 6 months or go up to 10 years, allowing flexibility depending on their financial goals.
- Future Savings: This is a given that once an individual starts investing in an RD account, your future can be secured financially. Not only do you save a fixed amount every month, but you also reap the benefits in future on maturity earning a suitable RD interest rate on the principal amount.
- No Market-Related Risks: Investing in the stock market or mutual funds can be risky as the returns are linked to market performance. Recurring Deposits, on the other hand, have no market-related risks. One will get a fixed return, irrespective of market conditions.
- Regular Savings: Recurring Deposits help inculcate the habit of regular savings. By investing a fixed amount at regular intervals, one can build up savings over time and meet their financial goals.
Why to invest in RD?
Investing in a Recurring Deposit (RD) offers several benefits that make it an attractive option for many investors, especially those looking for a safe, disciplined, and systematic way to save money. An RD account guarantees low-risk investment, guaranteed returns, fixed savings each month, tax benefits, flexibility in terms of tenure and amount, and can be opened by any age group with a required set of documents.
What are the Recurring Deposit Interest rates?
The recurring deposit rates start from as low as 3% and go up to 7.90%, depending on the amount and the tenure.
For complete details on the interest rates, please refer Interest Rates for Recurring Deposits.
You can also use the Recurring Deposits Interest Calculator to calculate the exact rate of interest depending on the tenure and investment amount.
Investment Tips on Recurring Deposit
While opening an RD account comes with its set of benefits, one needs to remember certain tips to ensure a smooth process:
- Choose the right tenure depending on the amount of investment
- Compare Recurring Deposit interest rates and finalise wisely
- Consider its impact on tax savings, if any
- Monitor your RD deposits on regular basis
- Avoid premature withdrawals from the recurring account
Frequently Asked Questions- Recurring Deposits
What is a Recurring Deposit (RD)?
A Recurring Account is a type of savings account wherein a fixed amount is deposited every month for a fixed tenure at an agreed rate of interest. RD Deposits allow individuals to save systematically while earning interest, offering both disciplined savings and guaranteed returns. RDs are suitable for people who want to save for a specific goal over time.
What are the Recurring deposits rules?
The rules for RD Deposits include:
- The depositor must contribute a fixed amount every month for a specific tenure.
- The minimum tenure typically ranges from 6 months to 10 years.
- Interest is paid either monthly, quarterly, or at the end of the term (depending on the type of RD).
- If a depositor misses an installment, it may lead to penalties or account closure.
- The interest rate is fixed at the time of opening the RD and does not change during the tenure.
- Premature withdrawal is possible, but it often incurs a penalty.
Can I open a Recurring Deposit Account online?
Yes, you can open a Recurring Deposit account online through internet banking or mobile banking. For internet banking, customers need to visit FedNet whereas for mobile banking, customers must use the mobile banking app FedMobile.
Which is better, FD or RD?
Both Fixed Deposit and Recurring Account are good savings options, but the better choice depends on your financial goals. Fixed Deposits are suitable if you can deposit a lump sum amount at once and prefer to keep your money untouched for a fixed term. Recurring Deposits are ideal if you want to save a small, fixed amount regularly over time. It’s perfect for those who may not have a lump sum but wish to save systematically. In terms of returns, both FD and RD Deposits generally offer similar interest rates, but RD might have slightly lower returns due to regular monthly contributions.
Can I withdraw RD anytime?
No, you cannot withdraw from a Recurring Account anytime without penalties. RDs typically require you to complete the full tenure. However, you can make premature withdrawals in most cases, but the RD interest rate on premature withdrawal may be lower than the original rate, and a penalty might be charged.
Is it necessary to have a Savings Account with the bank to open a Recurring Deposit?
It is not necessary to have a Savings Account with the bank where you plan to open a Recurring Deposit. If your savings account is with another Bank, you can use the NACH (National Automated Clearing House) system to authorize monthly debits from your existing savings bank account (with any bank). This is done via an e-Mandate, which allows Federal Bank to collect the RD installment automatically each month.
Is the interest earned on a Recurring Deposit (RD) taxable?
Yes, the interest earned on a Recurring Deposit (RD) is taxable. It is subject to Tax Deducted at Source (TDS) if the interest exceeds a certain limit set by the government. The taxable interest is added to your total income and taxed as per your applicable tax bracket. However, you can claim a tax exemption under Section 80C for a Tax-Saving RD if it meets the criteria.
How do I pay my RD monthly?
You can pay your RD monthly through several methods:
- Auto-debit: Set up an automatic deduction (standing instruction) from your linked Federal Bank savings account each month. (OR) If your savings account is with another Bank, set up an NACH Mandate for automatic deduction from your other Bank savings account.
- Online payment: You can manually pay your RD installment through the bank’s internet banking or mobile banking platform.
- Cheque or cash deposit: You can also visit the bank branch and deposit the amount by cheque or in cash.
What is the minimum deposit for RD?
Minimum deposit amount for recurring deposit at Federal Bank is just Rs. 50/- and additional contribution in multiples of Rs.10/-
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