Recurring deposit are the savings product offered by financial institutions which help customer with regular incomes to deposit fixed amount every month into there recurring deposit account for example 500/- every month or as per the defined frequency type.
When the RD account is opened, the maturity value is indicated to the customer assuming that the monthly installments will be paid regularly on due dates.
Customer can avail loans against the collateral of Recurring deposit upto the value of 70-80% of the Deposit value.
Use-case I: Submit RD Account Application
When setting up/creating a deposit account the following details need to be known:
- Term/tenure: What is the length of the term/tenure (in months)
- Deposit amount: How much money customer to deposit amount and frequently. There would typically be some rules around min and max deposit supported.
- Deposit Frequency: It means how frequently the customer has agreed to deposit amount into his RD account
- Interest Type: Simple or Compounding
- Nominal annual interest rate: What is the interest rate to be applied to deposit amount for the term expressed as a nominal annual rate. There would typically be some rules around min and max interest rate supported.
- Pre-matured Interest Rate: Interest rate applicable if customer withdraws RD before the tenure.
- Commencement date: On what date does the term/tenure commence from.
- Lock-in Period: Days / Months: It typically means customers are not allowed to withdraw deposit before the tenure of the RD Account.
- Minimum balance to be maintained: It is typically used for Regular savings account.
Using the above information, it should be possible to derive the following at time of opening/creating a deposit account:
- Maturity date: Given commencement date and tenure length, maturity date is known.
- Accrued interest on maturity: Assuming that the monthly installments will be paid regularly interest will be calculated based on the recurring deposits as per the defined frequency.
- Maturity amount: maturity value is indicated to the customer assuming that the monthly installments will be paid regularly on due dates.
- Recurring deposit Schedule: Schedule of the Recurring deposit should be maintained, this is to track the un-paid schedules of the RD.
A status is automatically assigned to the deposit account of SUBMITTED_AND_AWAITING_APPROVAL (represented on database as integer value 100).