A Deep Dive into the Documentation Required to Open a Recurring Deposit

December 03, 2024

documents-required-to-open-recurring-deposit-account

Saving money is an essential practice to secure your financial future. While there are various investment options available, Recurring Deposits (RDs) are a popular choice, especially for individuals who prefer safe and low-risk options. RDs not only help inculcate the habit of regular saving but also provide an opportunity to earn interest on your savings.

 

In this article, we will take a deep dive into the documents required to open an RD account, as well as the KYC process involved. 

 

Recurring Deposit Documents Required

Before getting into the documentation requirements of recurring deposits, let's first understand what recurring deposits (RDs) are. Recurring deposits are a type of deposit where you make regular monthly or periodic deposits over a specific period of time. These deposits earn interest at a predetermined rate, which is added to the principal amount. At maturity, you receive the accumulated amount, which includes both the principal and interest earned.

 

To open an RD account, you need to have a Savings Account first. The Savings Account is then linked to your RD. Every month, on the RD payment date, the amount (as selected by you) gets debited from your Savings Account. 

 

Now, let’s look into the documents required to open a Recurring Deposit. If you are planning to open an RD with the same bank where you have a Savings Account, you won’t have to provide any additional KYC documents. For example, if you have a Savings Account with Ujjivan, you can open an RD with Ujjivan just by linking your Savings Account.

 

In case, you’re planning to open an RD with a different bank, here’s what you may need to provide.

 

  • Proof of Address: You may need to provide valid address proof documents such as Aadhaar card, passport, utility bills (electricity bill, telephone bill), or bank statements with your current address mentioned.
  • Proof of Identity: You must submit identity proof documents such as Aadhaar card, PAN card, voter ID card, or driving license.
  • Income Tax Document: It is mandatory to provide your PAN card for opening an RD account. This is required for tax purposes and to comply with the Know Your Customer (KYC) norms.

 

Benefits of RDs

  • Consistent Saving: RDs encourage disciplined saving as you need to contribute a fixed amount every month. This encourages a savings habit and ensures that you set aside a certain amount of money regularly.
  • Fixed Returns: Unlike other investment options that are market-linked, RDs offer fixed returns. The interest rate is predetermined at the time of opening the account, providing stability and predictability in terms of returns.
  • Flexibility: RDs offer flexibility in terms of deposit amounts and tenure. You can choose the monthly deposit amount based on your financial capacity, as well as select a tenure that aligns with your financial goals.
  • Low Risk: RDs are considered low-risk investments as they are backed by banks. Your principal amount is secure, and the interest earned is guaranteed.

 

Recurring Deposit Documentation Checklist

Table: Documentation Checklist

 

DocumentAcceptable Proofs
Address ProofAadhaar card, passport, utility bills (electricity bill, telephone bill), bank statements
Identity ProofAadhaar card, PAN card, voter ID card, driving license
PAN Card

Mandatory for tax purposes and KYC compliance

 

Tips for a Smooth RD Account Opening Process

  • Keep your documents handy: Ensure that you have all the necessary documents in order before visiting the bank or applying online.
  • Complete KYC formalities: Fill out the KYC form accurately and provide any additional information requested by the bank.
  • Maintain sufficient funds: Make sure you have the required funds to make the initial deposit when opening an RD account.

Final Thoughts

Opening a recurring deposit account is a smart choice for regular saving and earning interest on your savings. By understanding the recurring deposit documentation requirements and following the KYC process, you can easily open an RD account with confidence. 

 

Start small, dream big! Invest in Ujjivan Small Finance Bank’s Recurring Deposit and enjoy higher interest rates! Save for your long- and short-term goals with our RD and live a stress-free financial life. Start investing with just ₹100!

 

Apply Now

FAQs

1. Can I open an RD account online?

Yes, many banks offer the facility to open an RD account online. Check with your preferred bank for their online account opening process.

2. What is the minimum deposit amount for an RD?

The minimum deposit amount varies from bank to bank. It can be as low as ₹100.

3. Can I withdraw money from my RD before maturity?

Generally, banks do not allow premature withdrawal of funds from an RD account. However, some banks may allow it with certain terms and conditions.

4. Can I avail a loan against my RD?

Yes, some banks offer the facility to avail a loan against your RD. The loan amount is usually a percentage of the RD balance.

5. Is the interest earned on RDs taxable?

Yes, the interest earned on RDs is taxable as per your income tax slab.

6. Can I add more funds to my existing RD account?

No, recurring deposits have fixed monthly deposit amounts. To add more funds, you would need to open a new RD account.

7. Can I open multiple RD accounts?

Yes, you can open multiple RD accounts with different banks or with the same bank.

8. Can I change the monthly deposit amount for my RD?

Generally, banks do not allow you to change the monthly deposit amount once the account is opened. However, some banks may provide flexibility in this regard.

9. What happens if I miss a monthly deposit in my RD?

Missing a monthly deposit may attract penalties or affect the interest rate for that particular month. Check with your bank for their specific policy.

10. Can I nominate someone for my RD account?

Yes, you can nominate someone for your RD account in case of any unfortunate event.

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