What is an SBI RD Calculator?
The SBI Bank RD calculator is an online tool used to estimate the interest earned from investing in a recurring deposit. In the case of recurring deposits, the maturity amount comprises the total of all investments and the interest earned, with interest being compounded quarterly.SBI Bank offers RDs with a variety of tenure options, ranging from one year to ten years. The minimum monthly investment amount is ₹100, with subsequent investments in multiples of ₹10. There is no upper limit on the maximum investment amount in RDs.
The SBI RD calculator utilizes the following inputs to determine interest and the future value of the investment:
How to use an SBI RD Calculator?
The free and user-friendly SBI RD calculator allows individuals to easily estimate the maturity value of their recurring deposit. By entering details like the monthly investment amount and SBI RD interest rate, users can calculate the wealth created from their investment. The calculator employs the future value formula for this calculation.
For instance, if Ms. Shruti plans to invest ₹10,000 monthly for seven years at an SBI RD rate of 5.85%, the calculator yields the following results:
Total Investment: ₹8,40,000
Wealth Gained: ₹1,98,951
Total Corpus Created: ₹10,38,951
In this scenario, Ms. Shruti's investment of ₹8,40,000 today would grow to ₹10,38,951 in seven years, generating an interest income of ₹1,98,951.
How is interest and maturity amount on an RD calculated?
The interest on Recurring Deposits (RDs) is determined by banks and varies with the investment tenure. RD interest is compounded quarterly after an initial period of earning simple interest.
For example, if an investor starts an RD in June, they earn simple interest until September, after which interest is compounded quarterly. The quarters for RD investments are April to June, July to September, October to December, and January to March.
The formula for calculating RD interest and maturity value is:
Where, M = Maturity value
R = Monthly Instalment
N = Number of Quarters (tenure)
i = Rate of interest/400
Monthly installment: It is the investment amount done on a monthly basis by the investor.
Number of quarters: Investment horizon of investment in quarters.
Rate of interest: The return that one can earn on the RD investment. The interest rate is set by the banks.
How to open an RD account in SBI?
Opening an SBI RD account can be done through both offline and online methods. For offline account opening, individuals need to visit the nearest SBI branch and complete the RD account opening form. Along with the form, they must submit required KYC documents, recent passport-size photographs, and PAN card, Passport copy, Aadhar card, Voter's ID, or Driving License for individuals and companies.
HUFs need to provide the HUF declaration deed, bank statement, and self-attested PAN card. Partnership firms must submit the Certificate of Incorporation, Partnership deed, and ID proofs of authorized signatories. Online account opening is also available through the SBI website.
Benefits of using an SBI Recurring Deposit Calculator
The recurring deposit calculator offers several benefits: