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Punjab National Bank Recurring Deposit Interest Rates

Recurring deposits continue to enjoy popularity even in these days when investors are flocking to mutual fund and stock market investments, since they can now invest in these easily via their smartphones. The continued popularity of recurring deposits can be attributed to the fact that they provide a low capital– risk avenue for saving and additionally have a fixed-income component. Recurring Deposits also allow investors the freedom to start investing even with small amounts of monthly savings. 

Anticipated PNB recurring deposit interest rates for 2022

Sl. No Period ROI (% p.a.) A.Y.* For Senior Citizen ROI (% p.a.)**
1 180 days to 270 Days 4.4 4.42 4.9
2 271 days to less than 1 year 4.4 4.45 4.9
3 1 year 5 5.09 5.5
4 above 1 year & upto 2 years 5 5.09 5.5
5 above 2 year & upto 3 years 5.1 5.33 5.6
6 above 3 year & upto 5 years 5.25 5.65 5.75
7 above 5 years & upto 10 years 5.25 5.96 5.75

 

These rates came into effect for term deposits from August 2021. Investors should note that PNB bank states on its website that, “Rate of interest would be Card rate as applicable to the tenor of deposit as displayed on the website, subject to change from time to time.” 

Features and benefits of PNB recurring deposits

  • You can choose between a regular RD or an online RD (E-RD). 
  • There is no age-bar for investors. Even minors younger than 10 years old can start an RD with the guardianship of their parents or legal guardians. 
  • PNB’s recurring deposit scheme is open to individuals, companies, hindu undivided families, charitable trusts, clubs, associations and government bodies.
  • The bank has made arrangements for blind people to sign up for recurring deposits.
  • The same goes for illiterate recurring deposit investors. 
  • The minimum amount for monthly  investment is Rs 100.
  • The minimum tenure for a recurring deposit is 6 months.
  • Investors can apply for a loan or overdraft facility against their recurring deposit.

 

Things to keep in mind when opting for PNB recurring deposits: 

Penalties are applicable on non-payment or late payment. In cases of non-deposit of pending installments till maturity date, interest is paid on daily products basis compounded half yearly. Even if you deposit a chunk of installments just before the maturity date, the bank states that a penalty will be charged at Rs 1 for every Rs 100 per month installment. 

Keep in mind not just penalties, but also charges and fees, and deduct these from what you expect to earn in interest. Make use of an RD calculator to get absolute/ rupee amounts and do the math; don’t attempt addition and subtraction with the percentages as it can get confusing. Feed the PNB RD interest rates we have shared above, along with your desired monthly installment amount into any free online RD calculator to get the insurance amount. From this deduct the rupee amounts for fees and charges. Consider how much you might lose in case you have to pay penalties (though one would hope you don’t have to).

Compare the total earnings that you expect to get from your PNB recurring deposit with the amount you stand to gain from any other banks’ recurring deposits. 

Keep your minimum/ core/ base amount low. You can invest more (in multiples of 100) if you manage to save up more in a given month, but you want to avoid penalties on not making the base amount. 

If you already have recurring deposits with PNB Bank, even if their interest rate is the most attractive, it might be advisable to spread your investments above Rs 1 lakh in multiple scheduled banks. 

Similarly, if you already have a good amount saved up on recurring deposits and other fixed income investments, you might want to evaluate your risk appetite and risk profile to identify if you have the bandwidth for investments that might offer you higher returns, at higher capital risk. If you already have a steady income from your fixed income investments, you might have the potential to put a portion of additional savings into mutual funds and stock market investments.

To conclude, invest in an RD if any of the following are true for you:

  1. You need to balance your portfolio with some minimal risk, fixed-income investments. Especially if you have a whole lot of mutual fund SIP installments being debited from your account monthly, a few recurring deposits can help you balance your risk. 
  2. You are new to investing and want to see for yourself how your money can deliver earnings to you, on its own steam. 
  3. You have trouble putting down large amounts for fixed deposits, and even for mutual funds, and need to start with a really small amount. 
  4. You are nearing the end of your salaried years, want to continue investing but want to keep risk at the absolute minimum. 

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