Iob Bank RD Interest Rates

About Indian Overseas Bank Recurring Deposit

Indian Overseas Bank (IOB) RDs are investments that allow investors to save small amounts regularly. The bank has a tenure of 6 months to 10 years, and the interest rates vary with the tenure. 

IOB RD rates range between 4.85% to 6.50% p.a. for regular citizens. For senior citizens, the RD rates range between 5.35% to 7.00% p.a.. One can estimate the returns from their IOB RD investment using the IOB recurring deposit calculator. The RD rates of IOB are higher than their saving account rates. The IOB RD rate of interest differs based on the investor’s age, investment tenure, RBI policies and economic conditions in the country.

The interest that investor earns from RD investment is taxable as per their income tax slab rates. Also, this income has to be filed under the head ‘Income from Other Sources’ during their income tax returns. Moreover, the bank has to deduct a TDS of 10% if the interest income exceeds INR 40,000 while for senior citizens the limit is INR 50,000. Furthermore, this rate is applicable if the investor furnishes their PAN card details. Else, the TDS rate that the bank deducts is 20%.

IOB Recurring Deposits Features

• Tenure: The IOB recurring deposit tenure ranges between 6 months to 120 months, in multiples of 3 months
• Minimum and Maximum Deposit Amount: The minimum amount of investment in IOB RD is INR 50, and in its multiples of INR 5. However, there is no limit on maximum investment.
• Tax and TDS: IOB RDs do not qualify for tax saving. The interest income that one earns from IOB RDs is taxable as per the individual’s respective income tax slab rates. Moreover, IOB deducts a TDS of 10% if the interest income per annum exceeds INR 40,000 (INR 50,000 for senior citizens). The 10% TDS is applicable only when PAN details are submitted; else the bank deducts TDS at 20%.
  One can determine whether IOB RD interest income is above or below the TDS threshold limit using the IOB RD Calculator. Also, investors can calculate their income tax liability using Scripbox’s Income Tax Calculator.
• Premature withdrawal: IOB allows investors to prematurely withdraw their recurring deposits. However, IOB charges a penalty depending on their banking norms.
• Nomination Facility: Depositors can nominate beneficiaries for their IOB RDs.
• Convenience: Opening and managing recurring deposit investments are easy and convenient through IOB’s online portal.
• Loan Facility: IOB allows investors to take loans against their recurring deposits up to 95% of the outstanding balance.  

IOB RD Account Eligibility and Documents Required

Eligibility: Following are the eligibility criteria for opening an IOB RD account

• Resident Individuals, including minors
• HUFs
• Sole Proprietary firms
• Partnership firms
• Companies
• Associations and trusts
• NRI’s

The above entities must have a savings account with IOB and NRIs must have an NRE or NRO account. 

Deposit and account: One can open an IOB recurring deposit account with a minimum investment of INR 50 and in multiples of INR 5. However, there is no limit on the maximum investment amount for IOB RD.

Documents Required:

• PAN Card,
• Aadhar Card,
• Driving licence,
• Government ID card,
• Senior Citizen Card
• Utility bills,
• Passport,
• Bank statement with cheque,
• Certificate or ID card issued by the post office

Withdrawal: IOB allows investors to prematurely withdraw their RD investment, however, with a penalty. The bank charges a penalty on the interest rate which varies depending on the banking policies. 

Nomination: IOB RDs have a nomination facility where the account holder can nominate beneficiaries.

Types of IOB Recurring Deposit Schemes

Indian Overseas Bank offers the following recurring deposit schemes:

Recurring Deposits

• Tenure: 6 months – 120 months (in multiples of 3 months)
• Minimum Deposit Amount: INR 50, and in multiples of INR 5.
• Maximum Deposit Amount: No limit
• Tax Deducted at Source: Applicable
• Nomination Facility: Available
• Premature closure: Available, however, with a penalty depending on banking norms. 
• Penalty for late deposits: If the instalment is delayed beyond the stipulated due date and grace days, then banks will charge a penalty as per their norms. 
• Loan Facility: Available up to 95% of the outstanding RD balance. 

Can I open a recurring deposit account for a minor in IOB?

Yes, one can open an IOB RD account on behalf of a minor.

Is it possible to renew an RD account in IOB?

Yes, it is possible to renew an IOB RD account. However, renewal is possible as per IOB norms and rules.

Conclusion

Indian Overseas Bank RDs are considered a good investment for investors who can save small amounts of money regularly. Also, these schemes are considered low-risk investments as they offer guaranteed returns. However, investors must know that they have to pay taxes on interest earned on IOB RD investments. Therefore, investors must consider these taxes before investing in this scheme. 

Resources

1. IOB Fixed Deposit
2. IOB FD Calculator