Punjab National Bank RD – Types and Benefits of Recurring Deposit

Recurring deposits (RD) are an effective method to generate savings for an individual. Investing in recurring deposits not only paves the way to save money, but also to earn interest on your deposited sum.

In today’s financial market, Punjab National Bank RD is one of the most sought-after investment avenues. The term period of this RD account ranges between 6 months to 10 years. The term periods are further classified into:

  • Short-term tenor (6 months to 1 year)
  • Medium-term tenor (Between 1-5 years)
  • Long-term tenor (More than 5 years but less than 10 years)

Why Choose PNB RD Scheme?

Saving a certain sum every month in recurring deposits can lead to a significant amount in the long term. The rate of returns varies in case of an RD with the different term periods. The PNB RD rates also vary from a regular to a senior citizen.

Take a look what PNB recurring deposit has to offer –

  • The recurring deposit interest rate of up to 7%, with quarterly compounding
  • Allows users to invest as little as Rs. 100
  • Senior citizens can avail slightly higher interest rates up to 7.5%

Here are the Punjab National Bank RD rates as last updated on September 2019 are –

TenorGeneral Rates Senior Citizen Rates 
180 – 270 days6.35%6.85%
271 – 364 days6.35%6.85%
1 Year6.75%7.25%
1 Year 1 Day – 3 Years6.75%7.25%
3 Years 1 Day – 5 Years6.25%6.75%
5 Years 1 Day – 10 Days3.25%6.75%

Recurring Deposit interest rates can be calculated using the formula stated below –

I = {P*n (n+1) r}/2400

Here, I is the Interest amount; P is the Principal amount deposited; n is the lock-in period in months, and r is the Rate of Interest.

Suppose, Mr Atul opens an RD account with a regular deposit of Rs 500 on 1.4.17 for 24 months or 2 years. The applicable interest rate on the same is 6.5% as the total deposit amount would stand to Rs 12000 which is less than Rs 2 Crore. Interest on the same would be Rs 842 according to the formula.

Apart from getting the highest interest rates, RD in PNB is also eligible for tax benefits under the Income Tax Act of 1961.

The sum invested in a recurring deposit account is included in your yearly income and a Tax Deducted at Source (TDS) of 10% is applicable on interest earned (provided, it is more than Rs. 10,000/year). For saving TDS on your PNB RD gains, you are required to fill either of Form 15G or 15H.

Benefits of investing in Punjab National Bank recurring deposit 

By investing in Punjab National Bank RD, you can enjoy the following set of advantages –

  1. You are offered a diverse tenor ranging from 6 months to 10 years.
  2. The RD account holders can enjoy a loan facility up to 90% against the deposited sum.
  3. You can also appoint a nominee (any family member) to receive the matured amount after the tenor ends.
  4. Even minors above 10 years of age can open a PNB RD account. Minors below 10 years of age can also open RD account, provided the accounts are handled by their legal guardians.
  5. TDS deducted are subjected to the existing IT rules at the time of opening account.
  6. The penalty charged on non-payment of periodic deposits and premature withdrawal is also kept minimal at 1%.

For opening a PNB recurring deposit account, you can apply online or visit the nearest Punjab National Bank branch to avail the benefits that this RD scheme offers.

Types of RD schemes offered by PNB

Punjab National Bank provides various types of recurring deposit accounts. Some of the popular ones include:

  • PNB E-RD scheme

This type of RD account is only operated by internet banking users of Punjab National bank. Upon attaining maturity, the benefits will be credited to the same online account.

  • Punjab National Bank RD account

This RD account can be opened by any individuals who have attained 10 years of age or above by paying as nominal as Rs. 100 and in multiples after that. Applicants below 10 years of age can open an RD account with the help of legal guardians.

  • PNB Special RD account

This type of recurring deposit account can be opened by private or corporate bodies and government institutions. Any organization can open such accounts with at least 10 of its employees or 75% of the eligible employees, whichever is lower.

Eligibility criteria to open an RD account

To open a PNB RD account, you must fulfill these eligibility requirements:

  • Individuals, more than 10 years of age, can open an RD account by furnishing valid age proof. 
  • Minors below 10 years of age are allowed to operate an RD account under their parental guardianship.
  • Even the municipalities, panchayats and other quasi-government bodies also have access to RD in PNB.
  • HUFs, charitable trusts, proprietorships can also open recurring deposit accounts.

Documents required for starting an RD account

To open a Punjab National Bank RD account, you are required to submit any of the following documents mentioned below –

[A] Identify proof 

– A voter ID card or Aadhaar card

– PAN card

– Government ID card

– Ration card

– A senior citizen ID card

[B] Address proof 

– Passport

– Telephone or electricity bill

– Bank account statements with a cheque

– Any certificate or ID card issued by post office

Apart from the PNB RD scheme, you can also look for other investment avenues like Mutual Funds as a Systematic Investment Plan (SIP). It promises substantial returns that help in acquiring the amount of wealth an investor is aiming for.