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Canara Bank RDs are investments that allow investors to save small amounts regularly. They have a tenure of 6 months to 10 years, and the interest rates vary with the tenure. This article covers Canara Bank RD investments and its interest rates in detail.

Canara Bank RD Interest Rates 2021

Following are the RD interest rates offered by Canara Bank.

Canara Bank RD rates range between 6.2% to 7% for regular citizens. For senior citizens, the RD rates range between 6.7% and 7.5%. One can estimate the returns from their RD investment using a recurring deposit calculator. The RD rates of Canara Bank are higher than their saving account rates. The RD interest rates differ based on the age of the investor, tenure of the investment, RBI policies and economic conditions in the country.

Interest on RDs is taxable as per the individual investor’s income tax slab rates. Investors have to show it under the head ‘Income from Other Sources’ while filing their income tax returns. Moreover, the bank deducts a TDS of 10% if the interest income exceeds INR 40,000 for regular citizens. For senior citizens, the TDS threshold limit is INR 50,000. Also, the TDS rate of 10% is applicable if the investor submits the PAN details. Else, the applicable TDS rate of 20%.

TenureGeneral RD RatesSenior Citizen RD  Rates
180 days to 269 days6.35%6.85%
270 days to 364 days6.40%6.90%
1 year6.70%7.20%
1 year 1 day to 1 year 364 days7.00%7.50%
2 years to 2 years 364 days6.70%7.20%
3 years to 10 years6.20%6.70%
Note: Canara Bank RD rates are subject to change

Canara Bank Recurring Deposits

Following are the key features of Canara bank recurring deposits:

Tenure

The Canara bank 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 Canara bank RD is INR 50, and in its multiples thereafter. Also, there is no limit on maximum RD investment.

Canara Bank Recurring Deposit Rate

Canara Bank recurring deposit rate is in the range of 6.20%-7.00%. Returns from the recurring deposits can be estimated using the recurring deposit calculator.

Preferential Interest Rates

Canara bank offers preferential interest rates for senior citizens. Senior citizens are eligible for an additional 0.5% on their RD investments. The Canara bank RD interest rates for them range between 6.70%-7.50%.

Tax and TDS

Canara bank RDs do not qualify for tax saving. The interest income that one earns from Canara bank RDs is taxable as per the individual’s respective income tax slab rates. Moreover, Canara bank 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 cuts TDS at 20%.

One can determine whether Canara bank RD interest income is above or below the TDS threshold limit using the RD calculator. Also, investors can compute their income tax liability using Scripbox’s Income Tax Calculator.

Premature withdrawal

Canara bank allows investors to prematurely withdrawal their recurring deposits. However, Canara bank charges a penalty of 1% for prematurely withdrawing the amount. The interest rate in such scenarios is lower than the actual rate.

Nomination Facility

Depositors can nominate beneficiaries for their Canara Bank RDs.

Convenience

Opening and managing the recurring deposit investments is easy and convenient through Canara bank’s online portal.

Loan against RD

Canara bank allows investors to take a loan against recurring deposits. This will helps them to meet liquidity requirements. Furthermore, it saves time for depositors and avoids the hassle of applying for a fresh loan.

Investors can take loans such as loan against property (home loan), education loans, business loans, etc., against Canara bank RD. Also, one can compute the loan EMI using the loan EMI calculator. Furthermore, the loan EMI calculator also works as a personal loan EMI calculator. Moreover, it works as a home loan calculator and car loan calculator as well. The investor can also use the EMI calculator for different scenarios by changing the interest rate variables.

Requirements of Canara Bank RD Scheme

Eligibility

Following is the eligibility criteria for opening a Canara Bank RD account

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

Deposit and account

One can open a Canara Bank recurring deposit account with a minimum investment of INR 50 and in multiples thereafter. However, there is no limit on the maximum investment amount for Canara Bank RD.

Documents Required

Following are the documents required to open a Canara Bank RD account.

PAN Card, Aadhar Card, Driving license, Government ID card, Senior Citizen Card – Identity proof.

Utility bills, passport, bank statement with cheque, certificate or ID card issued by the post office – Address proof.

Withdrawal

Canara Bank allows investors to prematurely withdraw their RD investment, however, with a penalty. The bank charges a 1% penalty on the interest rate for premature withdrawal of the RD investment.

Tax

Investment in Canara Bank RDs is not eligible for tax benefits under Section 80C of the Income Tax Act, 1961. Moreover, the interest income is taxable as per the investor’s income tax slab rates. Investors of Canara Bank RD have to show their interest income under the head ‘Income from Other Sources’.

Also, the interest income is subject to TDS. The TDS rate is based on whether the investor has disclosed the PAN details or not.

If the investor submits the PAN Card details, then the applicable TDS rate is10% if the interest income exceeds INR 40,000 (for regular citizens). For senior citizens, the TDS threshold limit is INR 50,000.

If the investor doesn’t submit the PAN Card details, then the applicable TDS rate is 20% if the interest income exceeds INR 40,000 (for regular citizens). For senior citizens, the TDS threshold limit is INR 50,000.

Nomination

Canara Bank RDs have a nomination facility where the account holder can nominate beneficiaries.

Types of Deposit Schemes

Canara Bank offers the following recurring deposit schemes:

Recurring Deposits

  • Tenure: 6 months – 12 months (in multiples of 3 months)
  • Minimum Deposit Amount: INR 50, and in multiples of it thereafter.
  • Maximum Deposit Amount: No limit
  • Loan facility: Available, up to 90% of the deposit balance
  • Tax Deducted at Source: Applicable
  • Nomination Facility: Available
  • Premature closure: Available, however, with a penalty of 1%.
  • Penalty for late deposits: INR 1.50 for every INR 100 instalment per month for RD with five years tenure. INR 2 for every INR 100 instalment per month for RD with more than five years tenure. Also, the delay in remittance for more than four instalments, the RD account will be repaid at simple interest.

Canara Dhanvarsha- A Flexi Recurring Deposit Scheme

  • Tenure: 1 year – 10 years (in multiples of 3 months)
  • Minimum Deposit Amount: INR 1,000 and further deposits in multiples of INR 100.
  • Maximum Deposit Amount: INR 1,00,000
  • Loan facility: Available, up to 90% of the deposit balance
  • Tax Deducted at Source: No TDS is cut. However, the interest income is taxable as per the investor’s income tax slab rate.
  • Nomination Facility: Available
  • Premature closure: Available, however, with a penalty of 1%.

Is there a difference between the interest rates for Recurring Deposit and Fixed Deposit?

Canara bank offers different interest rates for recurring deposits and fixed deposits. Following are Canara Bank recurring deposit interest rates:

TenureGeneral RatesSenior Citizen Rates
180 days to 269 days6.35%6.85%
270 days to 364 days6.40%6.90%
1 year 1 day to 1 year 364 days7.00%7.50%
2 years to 2 years 364 days6.70%7.20%
3 years to 4 years 364 days6.20%6.70%
5 years to 7 years 364 days6.20%6.70%
8 years to 10 years6.20%6.70%

Following are the Canara bank fixed deposit interest rates:

TenureFD Interest RatesSenior Citizen FD Interest Rates
7 days to 45 days2.95%2.95%
46 days to 60 days3.90%3.90%
61 days to 90 days3.90%3.90%
91 days to 120 days4.00%4.00%
121 days to 179 days4.00%4.00%
180 days to 364 days4.45%4.95%
1 year5.25%5.75%
1 year 1 day to 1 year 364 days5.20%5.70%
2 years to 2 years 364 days5.40%5.90%
3 years to 10 years5.50%6.00%

Invest the money in the fixed deposits that best suit your needs.

Conclusion

Canara Bank RDs are considered a good investment for investors who can save small amounts of money regularly. They are low risk investments as they guarantee returns and hence suit investors who prefer guaranteed return from their investments. However, one has to consider the taxes levied on the interest income of RD investments.

Frequently Asked Questions

What are the limits on the minimum and maximum deposits?

The Canara Bank RD account can be opened with as low as INR 50 per month. Also, there is no limit on the maximum amount for investment in a Canara Bank RD.

Can I open a recurring deposit account for a minor?

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

How to apply for Canara Bank RD?

One can open a Canara Bank RD account through offline and online modes. For online mode, one has to visit their website. And for offline mode, one has to visit the nearest branch of Canara Bank. To be able to invest in Canara Bank RD, one needs to have all valid documents. For identity proof, one needs to have a PAN Card, Aadhar Card, Driving license, Government ID card, Senior Citizen Card. For address proof, one needs to have utility bills, passport, bank statement with cheque, certificate or ID card issued by the post office.

Is it possible to renew an RD account?

Yes, it is possible to renew a Canara Bank RD account. However, the renewal is possible as per Canara Bank norms and rules.

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