For salaried professionals, fixed deposits are a popular means to invest their hard-earned money. Fixed deposits offer several advantages that other investment means don’t:
- They’re flexible: FDs are available in a range of maturities, ranging from 7 days to several years. They allow customers to choose a time period that works best for them.
- They’re safe: In these days of high volatility in the stock markets, fixed deposits still present a haven of stability with their predictable returns. The returns from FDs are known in advance, making it easier for people to plan later purchases.
- They’re easy to manage: FDs can be opened online on most financial platforms with a few clicks. Online platforms also allow customers to either set options to withdraw their FDs when they mature, or reinvest them immediately.
But while FDs have many obvious advantages, all FDs aren’t made equal. The biggest differentiating factor for FDs is their interest rate, which determines how much money you’ll receive at the end of the maturity period. Different FD issuing institutions have different rates for FDs, and they can vary quite a bit — senior citizens, for instance, usually get higher rates on their FDs. But there’s a whole class of institutions which offer higher rates than the conventional FD.
Bank FDs vs Corporate FDs
FDs are of two types — bank FDs and corporate FDs. Bank FDs are issued by banks, either in the public or private sector. Corporate FDs, on the other hand, are issued by institutions that include housing finance companies other than banks. They can be issued by any company. These FDs typically have a higher interest rate than those offered by bank FDs. They offer higher rates of interest because they have marginally higher risk than bank FDs. But if you pick a reliable corporate institution, you can earn a higher rate of interest on your FD, with negligible increase in risk. Corporate FDs are rated by several agencies like CARE and CRISIL, and highly rated Corporate FDs can be a good choice for those wishing to earn higher returns on their deposits.
One such institution that offers a corporate FD is PNB Housing Finance. PNB Housing Finance is promoted by the country’s 2nd largest bank Punjab National Bank. It runs as a completely separate entity from PNB, and was listed on the stock markets in 2016. It offers FDs for durations between 12 months and 120 months, and the rates of interest are significantly higher than for bank FDs. For a regular deposit up to Rs. 5 crore, PNB Housing Finance currently offers an interest rate of 7.95% for a duration of 12 months, which goes up to 8.25% for a 120 month duration.
PNB Housing even offers online deposits which is available on their website and mobile application. The digital version also provides facility for auto renewal and online maturity which are unique in the housing finance sector.
For more details on the interest rates of PNB Housing Finance FDs, click here.