Missed Your RD Instalment? Know What Banks May Do Next
Recurring Deposits (RDs) are a popular option for people who want to save a fixed amount every month while earning interest. Unlike a Fixed Deposit, where a lump sum is invested at once, an RD allows investors to build their savings gradually through regular monthly instalments.
But what happens if you miss an RD instalment because your salary was delayed, your account had insufficient funds or you simply forgot to make the payment?
A single missed instalment does not usually mean that the RD account will be closed immediately. However, the bank may charge a penalty, and repeated defaults can affect the status of the account.
The bank may also levy a penalty for the missed payment. The penalty amount and the way it is applied can differ depending on the bank and the specific RD scheme.
Some banks may provide a specific period during which missed instalments can be paid. In certain cases, customers may get an opportunity to clear dues for several consecutive months. However, the permitted period and conditions vary between banks.
Therefore, customers should check the terms and conditions applicable to their particular RD rather than assuming that every bank follows the same rule.
If an RD continues to remain irregular, the bank may stop accepting further monthly instalments and may close the account prematurely, depending on its rules. In some cases, prolonged non-payment, such as around six months, may result in the RD being treated as irregular.
The treatment of the accumulated amount can also vary. Depending on the bank's terms, the remaining balance may be transferred to the customer's linked savings account or handled in another manner.
If you have missed an RD instalment, it is better to check with your bank promptly, find out the outstanding amount and clear the dues within the permitted period. The exact penalty, grace period and account closure rules depend on the bank and RD scheme.
Disclaimer:This article is for information purposes only. RD rules, penalties and account closure terms may vary across banks and schemes. Please check with your bank for the latest applicable rules.
But what happens if you miss an RD instalment because your salary was delayed, your account had insufficient funds or you simply forgot to make the payment?
A single missed instalment does not usually mean that the RD account will be closed immediately. However, the bank may charge a penalty, and repeated defaults can affect the status of the account.
A missed instalment does not mean immediate closure
Banks generally do not close an RD as soon as one monthly instalment is missed. Instead, the account may continue, with the unpaid instalment becoming due.The bank may also levy a penalty for the missed payment. The penalty amount and the way it is applied can differ depending on the bank and the specific RD scheme.
Missed payments can usually be regularised
If you miss one or more instalments, you may be allowed to bring the RD up to date by paying the outstanding amounts along with the applicable penalty.Some banks may provide a specific period during which missed instalments can be paid. In certain cases, customers may get an opportunity to clear dues for several consecutive months. However, the permitted period and conditions vary between banks.
Therefore, customers should check the terms and conditions applicable to their particular RD rather than assuming that every bank follows the same rule.
What if instalments remain unpaid for months?
The situation can become more serious when instalments remain unpaid for an extended period.If an RD continues to remain irregular, the bank may stop accepting further monthly instalments and may close the account prematurely, depending on its rules. In some cases, prolonged non-payment, such as around six months, may result in the RD being treated as irregular.
The treatment of the accumulated amount can also vary. Depending on the bank's terms, the remaining balance may be transferred to the customer's linked savings account or handled in another manner.
Check your bank's RD rules
Missing an occasional instalment does not necessarily bring an RD to an end. However, delaying payments repeatedly can result in penalties and may eventually lead to the account becoming irregular or being closed.If you have missed an RD instalment, it is better to check with your bank promptly, find out the outstanding amount and clear the dues within the permitted period. The exact penalty, grace period and account closure rules depend on the bank and RD scheme.
Disclaimer:This article is for information purposes only. RD rules, penalties and account closure terms may vary across banks and schemes. Please check with your bank for the latest applicable rules.
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