Recurring deposits encourage a healthy saving habit for income regularisation. Not only do you save money but also earn interest on your deposits. Continue reading to see what PNB (Punjab National Bank) recurring deposit options have to offer.
Punjab National Bank (Recurring Deposit)- Interest Rates for different Investment Periods
|Investment period||RD rates for regular deposit||RD rates for Senior Citizens|
|180 days to 270 days||6.75%||7.25%|
|271 days to 364 days||6.75%||7.25%|
|1 year 1 day to 2 years||6.90%||7.40%|
|2 years 1 day to 5 years||6.90%||7.40%|
|5 years 1 day to 10 years||6.70%||7.20%|
- Up to 7%, Recurring Deposit rates are offered, with quarterly compounding
- Minimum amount that can be deposited is Rs 100
- Senior citizens can avail RD rate upto 7.50%
- The deposit tenure of recurring bank account ranges from 6 months to 120 months
- Loan facility is available against deposits
- Nomination facility is available, so any family member or spouse can be nominated to receive the final amount
- Minors above 10 years of age can open an account in his/her name and minors below 10 years can have an account that will be handled by legal guardians.
- TDS deductions are subject to existing income tax rules at the time of RD account opening.
- Penalty on non-payment of the periodic deposit is Rs. 1.00 for Rs. 100/- p.m
- You can visit your nearest PNB branch to open your recurring deposit account and avail the benefits that PNB RD schemes have to offer.
- Loan facility upto 90% of deposit can be availed.
PNB Recurring Deposit: Is it the best way to save?
Saving a specific amount of money every month can lead to a substantial amount for the emergency fund in the long term.Recurring deposit options can be availed to do so. However, they are not the best saving option if wealth creation is the objective. Let’s see you plan on saving for your retirement. A Recurring Deposit with 7% interest rate may not give you the returns needed to create a decent retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you create the kind of wealth you are aiming for.
The Benefits of Investing in SIPs
- A small amount of money that can be as low as Rs 500 has to be deposited by you every month or every quarter.
- On the basis of your budget and investment goal, your money will be invested in debt or equity funds. In the past decade, Equity Linked mutual funds have performed well in the market with a return of 12-22%. This will give significantly higher returns than recurring deposits.
- There is no penalty on money withdrawal from SIP account. This means that SIPs have higher liquidity when compared to recurring deposits that levy a penalty on premature withdrawal.
- Individuals above 10 years of age can open a recurring deposit account by providing valid proof of age documents.
- Minors below 10 years of age can open a recurring deposit account under parental guardianship.
- HUFs, Proprietorship firms, charitable trusts, commercial organizations, trusts, associations, clubs, and societies can open their RD account.
- Panchayats, municipalities, government and quasi-government bodies can have RD accounts with PNB.
PNB RD: Premature withdrawal rules
- If deposited amount is prematurely withdrawn, a penalty of 1% will be levied as per bank rules.
- The penalty will also be applicable if the RD account is irregular or discontinued.
Tax Benefits on PNB RD
All recurring deposits, including PNB recurring deposit, are taxable under the Income Tax Act 1961. The money that is invested in RD will be included in your yearly income and a TDS ( Tax Deducted at Source) of 10% is applicable on the interest earned ( If it is more than (if it is more than RS. 10,000 per year).To save TDS on your RD gains, you can fill either Form 15G or Form 15H.
Conditions for submitting Form 15G:
- You are an individual or HUF
- You must be a Resident Indian
- You should be less than 60 years old
- Tax calculated on your Total Income is nil
- The total interest income for the year is less than the minimum exemption limit for that year, which is Rs 2,50,000 for the financial year 2016-17
To open a recurring bank account with Punjab National Bank, you need to submit any one of the documents from both the category.
A. Proof of identity
- PAN card
- Voter ID card
- Driving License
- Government ID card
- Photo ration card
- Senior citizen ID card
B. Address Proof
- Telephone bill
- Electricity bill
- Bank statement with cheque
- Certificate /ID card issued by the post office.