A Recurring Deposit, or RD, works like a Fixed Deposit but instead of depositing one lumpsum, you deposit a fixed amount every month for a chosen tenure, and the bank pays you compound interest on the whole accumulated amount. It's essentially a disciplined monthly savings habit with a guaranteed, bank-backed interest rate attached to it.
RDs suit people who don't have a large sum to invest right away but can commit to setting aside a fixed amount every month, similar in spirit to a SIP but for a fixed-income instrument instead of a mutual fund. The interest earned is fully taxable, and RD returns are generally similar to FD rates offered by the same bank. They're a good, low-risk option for short-term savings goals, like building an emergency fund or saving for an upcoming expense.