A Recurring Deposit (RD) is a popular savings scheme offered by banks and financial institutions, where an individual deposits a fixed amount of money at regular intervals, usually on a monthly basis, for a predetermined period. Unlike Fixed Deposits, where the entire sum is invested at once, an RD allows investors to contribute smaller, periodic amounts towards their investment. The interest rate offered on RDs is generally higher than a savings account but lower than Fixed Deposits. The principal amount and interest are paid out to the investor at the end of the agreed tenure, and the interest is compounded quarterly or monthly depending on the institution.

The Recurring Deposit scheme is ideal for individuals who have a steady income and want to build a corpus over time. One of its main advantages is the disciplined savings approach it encourages, making it easier for people to save regularly. It is also a low-risk investment option, offering guaranteed returns at a fixed interest rate. However, like Fixed Deposits, premature withdrawals of an RD may lead to penalties, and the investor may not be able to access the funds before the maturity date without incurring a loss in interest. Nonetheless, RDs remain a popular choice for those looking to save systematically and earn interest without exposure to market risks.