The Full form of RD is Recurring Deposit. Recurring Deposit or RD is a kind of Term Deposit offered by banks in India. It helps people with regular incomes to deposit a fixed amount every month for certain period of time into their Recurring Deposit account and earn interest at the rate same as applicable to Fixed Deposits (FD). RD is a financial instrument mainly directed towards encouraging savings. In this scheme, investors have the flexibility to save a specific sum every month either in a bank’s or financial institution’s RD account for a predetermined tenure and earn interest on this amount. At maturity, interest is paid out along with the principal amount. All resident Indians and Hindu Undivided Families (HUFs) are eligible to open RD account and this account can also be opened for minors by their parents or legal guardians. The tenure of RD usually varies from 6 months to 10 years and compounding of interest generally occurs on every quarter for an RD scheme. In RD, most banks offer loans for up to 90% of the deposit value. Premature withdrawal is allowed in RD without a penalty while in some case banks may charge a penalty. The Interest earned on RD is taxable and most banks deduct TDS.