Flexi Recurring Deposit 2026: How a Variable-Instalment RD Works and Which Banks Offer It

By Nitish Bharadwaj · Published Aug 24, 2026 · 5 min

A Flexi Recurring Deposit works like a regular RD but removes its biggest rigidity: instead of one fixed monthly instalment, you commit to a minimum 'core' amount and can deposit up to roughly 10 times that in any month you have surplus cash, at the same RD interest rate. SBI, Bank of India, Indian Bank, Indian Overseas Bank, and Punjab National Bank all run a version of this scheme. This guide covers the core-amount mechanic, interest calculation, tax treatment, and when it beats a regular RD, a sweep-in FD, or a SIP.

A standard Recurring Deposit locks you into one number: deposit less than your fixed instalment in any month and the bank charges a penalty; deposit more, and the surplus just sits in your savings account earning far less. A Flexi (or Variable) Recurring Deposit removes that second inefficiency — you still commit to a minimum 'core' instalment every month, but any surplus above it, up to roughly ten times the core, earns the same RD-grade interest instead of idling in a savings account. SBI, Bank of India, Indian Bank, and Punjab National Bank all run a version of this, and most savers have never heard of it.

What a Flexi RD Actually Changes

The mechanic is simple: every Flexi RD is built around a 'core amount' — a fixed minimum you commit to depositing each month, exactly like a regular RD's fixed instalment. The difference is what happens above that floor. In a regular RD, depositing more than your fixed instalment isn't even an option through the account itself — the extra has to go elsewhere. In a Flexi RD, you can deposit anywhere between the core amount and a bank-specified multiple of it — commonly up to 10 times the core — in any month you have surplus cash, without opening a fresh account or negotiating a new rate.

How the Core Amount Works, Bank by Bank

Interest Rate and Tenure — No Different From a Regular RD

A Flexi RD doesn't pay a different interest rate than a regular RD at the same bank for the same tenure — the flexibility is entirely about how much you can deposit, not what you earn on it. Tenures typically run from 1 to 10 years, the same band most bank RDs offer, and interest usually compounds quarterly. Because each month's deposit can be a different amount, the bank calculates interest on each instalment separately, from its own deposit date through to maturity, then totals them — the same underlying formula as a regular RD, just applied to a variable stream of deposits instead of a fixed one.

Tax Treatment Is Identical to a Regular RD

Flexi RD interest is taxed exactly the way regular RD and FD interest is — added to your income under 'Income from Other Sources' and taxed at your slab rate, with TDS deducted under Section 194A once your total interest from that bank crosses ₹50,000 a year (₹1,00,000 for senior citizens), combined across every RD and FD you hold there. Submitting Form 15G or 15H to avoid TDS works the same way it does for a regular RD, provided your total income genuinely falls below the taxable threshold.

Premature Withdrawal and Closure

Closing a Flexi RD before maturity generally follows the same rules as a regular RD — the bank typically pays the savings-account rate on whatever has actually been deposited, rather than the RD rate you were quoted, and some banks apply a small additional penalty on top. A minimum holding period, often three months, usually applies before any interest is paid at all on premature closure, exactly as it does on a standard RD.

Who Should Actually Open One

• Your monthly savings genuinely vary — a salesperson, freelancer, or business owner with lumpy income can bank a good month's surplus at RD rates instead of it sitting idle in a savings account until the next FD.
• You already run a regular RD purely for the saving discipline, but keep finding yourself unable to add a bonus or festival payout to it mid-tenure.
• You'd otherwise park surplus cash in a sweep-in FD — a Flexi RD suits money you're actively building toward a monthly goal, while a sweep-in account suits an already-parked balance you rarely touch.
• Skip it if your income is genuinely fixed every month — a regular RD is simpler with no real flexibility to gain, and our RD vs SIP comparison is worth reading if you're weighing a market-linked option instead of either RD variant.

If you're deciding between a Flexi RD and the plain version, our RD vs FD guide covers how either stacks up against a lump-sum deposit, and our Post Office RD guide covers the government-backed version if you'd rather not deal with bank-specific core-amount rules at all. And if your real problem is idle savings-account cash rather than a recurring saving habit, a sweep-in FD solves that more directly than any RD variant.