Banking is a most essential part of our daily life. In the bank almost all the people place their hard cash money to the bank for future use as per their planning to expense. There are lots of terminology is used in Banking system such as- Savings, Fixed deposit, Recurring deposit, Double Recurring deposit, Interest, Tenure, Maturity Value, Loans, Equal Monthly Installment (EMI), Cumulative Term Deposit (CTD) scheme, etc.

Here we will learn, different different calculation for different different terminology. Hopefully all of you can learn all the calculation related to the banking.

Recurring Deposit (RD) or Cumulative Time Deposit (CTD) Scheme

Under this scheme, with full concern an investor deposits a fixed amount every month for a specific number of months and on expiry or at the end of this chosen period (called Maturity Period) by investor, he gets the amount deposited by him together with the interest due to him. The amount received by the investor on the expiry of the specified period is called maturity value.

Calculation of Interest on Recurring Deposit

Suppose $ P per month is deposited each month for ‘n’ months at R% per annum. Then, $ P deposited in the ‘n’th month will earn interest for 1 month, that deposited in (n – 1)th month will earn interest for 2 months, and so on, while the sum deposited in the first month will earn interest for ‘n’ months.

Thus we have –

Equivalent principal for one month = $ [P X (1 + 2 + 3 + ……………. + n)]

                                                  n(n + 1)

                                    = $ [P X ------------]


Thus, the interest can be calculated using the formula

                     n(n + 1)         1           R

  S.I. =  $ [P X ---------- X ------ X -------]

                        2             12         100

Maturity value (M.V) = (P X n) + I

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