People who are looking for safe investment options consider fixed deposits as their best solution. While the rate of interest remains fixed throughout the tenure, at times, there are rate cuts on these deposits. In the article, we will be highlighting why these cuts happen and what is the right solution.
Reasons behind Rate of Interest Fluctuation
Under certain circumstances, the Reserve Bank of India implements stringent monetary policy in order to manage the credit availability. There have been significant cuts in the fixed interest rates. RBI generally increases the repo rates to manage inflation by controlling the flow of cash within the economy. Subsequently, banks hike up the fixed deposit rates.
Additionally, cuts in CRR generate more liquidity; however, it has a long-term impact on the fixed interest rate. Therefore, rate cuts impact different aspects of banks, including loans and fixed deposits interest rates. This is the reason behind the recent cuts in the FD interest rates. There are many factors that influence these cuts, including –
- Demand and supply
- Liquidity condition
- Rate of inflation Tentative yield to maturity
- Decreasing call rates
Punjab Housing Finance Limited
Amidst the banks cutting down finance rate, Punjab Housing Finance Limited is offering a fixed deposit interest rate of up to 7.60%. This rate is higher than many other leading providers in the country.
We have explained the rate of return offered by PNB housing in the following table –
| Tenure (Months) | Cumulative Option ROI (PA) | |
| ROI (p.a.) | Tentative yield to maturity | |
| 12-23 | 7.00% | 7.00% |
| 24 – 35 | 7.00% | 7.25% |
| 36 – 47 | 7.15% | 7.67% |
| 48 – 59 | 7.15% | 7.95% |
| 60 -71 | 7.25% | 8.38% |
| 72 – 84 | 7.35% | 7.35% |
| 120 | 7.35% | 10.32% |
| Tenure | Non-Cumulative Option ROI (P.A) | |||
| Monthly | Quarterly | Half Yearly | Annual | |
| 12-23 | 6.75% | 6.80% | 6.85% | 7.00% |
| 24 – 35 | 6.75% | 6.80% | 6.85% | 7.00% |
| 36 – 47 | 6.90% | 6.95% | 7.00% | 7.15% |
| 48 – 59 | 6.90% | 6.95% | 7.00% | 7.15% |
| 60 -71 | 7.00% | 7.05% | 7.10% | 7.25% |
| 72 – 84 | 7.10% | 7.15% | 7.20% | 7.35% |
| 120 | 7.10% | 7.15% | 7.20% | 7.35% |
There is a mandatory lock-in period of three months, post which investors can withdraw the FD. However, in this case, the rate of interest will be lower than the one you agreed upon when signing the FD. If you withdraw six months before the maturity date, then the interest will be paid at 4% p.a. And for withdrawals made any time after the six months, the interest rate will be 1% less than the applicable interest rate.
Final Thoughts
This is everything that you need to know about one of the best-fixed deposit plans available today. Along with a higher rate of interest, the fixed deposit by PNB housing holds AA+/negative rating acquired from CRISIL. This makes the provider one of the safest investment options out there.