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RD Calculator

A recurring deposit takes the same amount every month and pays a fixed rate, compounded quarterly. The interest always looks small against the rate — not because the rate is worse, but because most of the money has not been in the deposit for long. This shows the maturity value and exactly why.

Check the working

A worked example

A fixed case, for reference.

Take ₹5,000 a month at 7% a year for 60 months.

  1. Quarterly rate

    i=7400=0.0175i = \frac{7}{400} = 0.0175

  2. Quarters in 60 months

    n=603=20n = \frac{60}{3} = 20

  3. Growth over the tenure

    (1.0175)20=1.4147782(1.0175)^{20} = 1.4147782

  4. The monthly adjustment

    1−(1.0175)−1/3=0.00576621 - (1.0175)^{-1/3} = 0.0057662

  5. Maturity value

    5,000×0.41477820.0057662≈3,59,6645{,}000 \times \frac{0.4147782}{0.0057662} \approx 3{,}59{,}664

You deposit ₹3,00,000 and the RD matures at ₹3,59,663.95, so the interest is ₹59,663.95 — about 19.9% of what you put in. That is far short of 7% × 5 years = 35%, and it is not a worse rate. The first instalment is in the deposit for 60 months and the last for one, so on average your money is invested for about two and a half years.

The formula

M=R×(1+i)n−11−(1+i)−1/3M = R \times \frac{(1 + i)^{n} - 1}{1 - (1 + i)^{-1/3}}

The formula banks publish for recurring deposits.

M=∑k=1mR (1+i)k/3M = \sum_{k=1}^{m} R\,(1 + i)^{k/3}

What it adds up: every instalment grows, compounding quarterly, for the months it is held. The first is held for the whole tenure and the last for one month.

What each symbol means

M
the maturity value
R
the amount deposited each month
i
the quarterly rate — the annual rate in percent divided by 400
n
the number of quarters — months divided by 3
m
the number of monthly instalments
k
the months a given instalment stays in the deposit

What this assumes, and where it stops

Assumptions

  • Every instalment is paid on time, at the start of each month.
  • Interest compounds quarterly, using the formula published by the Indian Banks’ Association.
  • The rate is fixed for the whole tenure.
  • Nothing is withdrawn before maturity.

Limitations

  • Tax is not deducted. RD interest is taxable as income, and TDS can apply.
  • A late or missed instalment usually attracts a penalty and changes the maturity value. That is not modelled.
  • Banks credit interest at the end of each quarter and may round at each step, so a bank’s maturity figure can differ from this one by a small amount.
  • Inflation is not deducted unless you turn the overlay on.

What this calculator does

  • Calculates the maturity value of a monthly deposit, using the formula published by the Indian Banks’ Association.
  • Separates what you deposited from the interest it earned.
  • Shows interest as a share of your deposits, which is the figure that explains why an RD pays less than rate × years.

Common questions

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