2nd Largest Govt Bank Offers A Solid 8.05% Interest On Fixed Deposits

Punjab National Bank, the second largest government bank in the country after State Bank of India offers a solid 8.05% interest on fixed deposits. Let's take a look.

PNB 666 Days deposit: Good for super senior citizens

The PNB 666 days deposit offers super senior citizens an interest rate of 8.05%, senior citizens 7.75% and 7.25% for regular depositors. For super senior citizens the interest rates are good, though, not the best for the other categories. For example for regular depositors there are other banks that offer much better interest rates than 7.25%. For example, IDFC First bank offers an interest rate of up to 7.75% for 3-year regular deposits.

Above 2 year & upto 3 years are competitive

In this tenure of deposits at PNB, the bank offers an interest rate of 7% for regular deposits, 7.50% for senior citizens and 7.80% for super senior citizens. Having said that there are many other banks that offer slightly higher interest rates on fixed deposits. We believe that interest rates have now reached their peaks and when that happens it is better to go for fixed deposits with a long-term tenure.

For example, let us say that you invested for 2-years and the deposits mature after 2-years when interest rates have fallen all over again. This means on renewing the deposits you are likely to get very low interest rates. The ideal way to invest is to look for deposits that have a maturity period of 3-5 years, so you are perfectly hedged against falling interest rates.

We believe that the RBI is done with its rate hikes or at best there could be another 25 basis points hike by the RBI. This means that it is always better to invest in deposits of longer tenures. We suggest to try and invest for a duration of 5-years. With inflation likely to ease in the next few months, the Reserve Bank of India is likely to cut rates perhaps early next year. So, the window of opportunity to invest with high interest rates could perhaps be until late this year.