Punjab National Bank (PNB) is the 2nd largest public sector bank in the country both in terms of the network as well as business. After its merger with the Oriental Bank of Commerce and United Bank of India, PNB boasts of a customer base of more than 180 million and close to 11,000 branches.
While PNB, like all other Indian banks, offers the benefits of a savings account, senior citizens in the country can also opt to invest in PNB’s government-backed savings scheme to enjoy accelerated returns.
The PNB Senior Citizen Scheme is such an investment option that caters specifically to retired individuals. The benefits of this scheme include a high-interest rate that allows investors to maximise their returns and meet their post-retirement financial requirements without strain.
Features of the PNB Senior Citizen Savings Scheme
These are the most notable features of the PNB Senior Citizen Scheme –
- The minimum deposit allowed for this scheme is Rs.1000, while the maximum limit is set at Rs.15 lakhs. Deposits can be made only in multiples of Rs.1000.
- The maturity tenure is 5 years. The term may be extended for another 3 years.
- The amount generated on maturity in a joint account can be received only by the first account holder.
- The depositor has the option to choose more than one person as a nominee.
Rate of Interest against PNB SCSS
The government declares the interest rate on SCSS prior to each quarter. The current SCSS interest rate in PNB of 7.4% has been notified on July 1st, 2020.
The rate of interest for the Senior Citizen Savings Scheme may vary in across quarters. Here is an indicative list of the interest rates applicable in the previous few quarters –
|Quarters||Rate of Interest|
|(FY 2020-21) July to September||7.4%|
|(FY 2020-21) April to June||7.4%|
|(FY 2019-20) January to March||8.6%|
|(FY 2019-20) October to December||8.6%|
|(FY 2019-20) July to September||8.6%|
|(FY 2019-20) April to June||8.7%|
|(FY 2018-19) January to March||8.7%|
|(FY 2018-19) October to December||8.7%|
|(FY 2018-19) July to September||8.3%|
|(FY 2018-19) April to June||8.3%|
As the PNB SCSS interest rate as on September 19th, 2020, stands at 7.4%, the deposits which are made under this scheme will generate interest according to this rate till September 2025.
If the term is extended by another 3 years, i.e., 2028, the applicable rate of interest will be the one which will be prevalent during renewal. The interest is paid out on a quarterly basis under PNB Senior Citizen Scheme.
Eligibility to Invest into PNB Senior Citizen Scheme
In order to start an account under the Senior Citizen Savings Scheme, individuals will need to comply with the following eligibility criteria –
- The depositor will have to be 60 years or more of age.
- The depositor will have to be 55 years or more (but less than 60 years) of age and must be superannuated or opted for VRS. The deposit will, however, have to be made within 1 month of receiving retirement benefits.
- The depositor, if they are retired Defence Service personnel, can invest in an SCSS if they are aged 50 years or more.
Note that members of HUF, NRIs, PIOs and civilian personnel of Defence Services are ineligible to invest under PNB Senior Citizen Scheme.
Taxability of Senior Citizen Saving Scheme
Depositors opening an account under PNB Senior Citizen Scheme can avail tax benefits pursuant to Section 80C of the Income Tax Act, 1961. Income tax benefits can be availed on an amount of up to Rs.1.5 lakh on the deposit made.
However, the interest earned through the scheme is entirely taxable. If the earned interest over the deposit made under PNB’s Senior Citizen Savings Scheme amounts to more than Rs.50,000 in a financial year, TDS will be applicable.
Comparison between Senior Citizen Saving Scheme and Fixed Deposit
PNB offers both Fixed Deposits and SCSS under its purview of financial products. While both these products offer guaranteed returns to investors, they have a few fundamental differences. These include –
|Senior Citizen Savings Scheme||Fixed Deposit|
|Rate of Interest||7.4% (July to September 2020)||3.00% to 5.80%|
|Maturity||5 years||7 days to 10 years|
|Tax Benefit Available On Returns||No benefits||No benefits|
|Tax Benefit Applicable On Investment)||Yes||Yes|
|Premature withdrawal||After 1 year (1.5% charge)||1%|
Documents Required to Invest UnderSCSS Scheme in PNB
Form A, required to invest in the PNB Senior Citizen Scheme can be availed from any of its branches and downloaded from its official website as well. The Form will have to be duly filled up and submitted with these supporting documents –
- Identity proof such as passport, PAN card etc.
- Address proof such as telephone bill, Aadhar card, etc.
- Age proof like birth certificate, voter ID, etc.
- Two passport-sized photographs
All these supporting documents must be self-attested by the applicant. It should be noted in this regard that PAN is mandatory for starting an account under the Senior Citizen Savings Scheme.