Fixed Deposits (FDs) have long been a popular investment option in India, providing people and businesses with a safe option to earn a return. While FDs have their own benefits, one thing that has often been seen as a drawback of such deposits is the fact that they have little flexibility. Once you invest in FDs for a certain period, you are stuck. There are not many options for you to withdraw your capital without having to pay some penalty.
Banks typically charge a penalty ranging from 0.5 per cent to 3 per cent. But all that changes with Punjab National Bank’s (PNB) Sugam Term Deposits scheme. It offers the flexibility to withdraw money prior to maturity without losing interest on the remaining deposit.
PNB Sugam Term Deposits scheme
The scheme is available for individuals (singly or jointly), minors who have attained the age of 10 years and above (with proof of age), proprietary/partnership firms, commercial organizations etc.
Depositors have to make an initial deposit of at least Rs. 10,000 to be eligible to participate in the Sugam Term Deposits scheme. Subsequent deposits can be made in multiples of Rs. 1, with the maximum investment per customer capped at Rs. 100 crores.
Interest rates and payment options are based on the deposit amount chosen. The applicable rates vary for deposits less than Rs. 2 crores, deposits ranging from Rs. 2 crores to Rs. 10 crores and deposits exceeding Rs. 10 crores but less than Rs. 100 crores. Partial withdrawals that change the deposit amount bracket are subject to the amended interest rate, which is effective as of the withdrawal date.
Depositors have the flexibility to choose the frequency of interest payments. Interest payments can be made on a monthly, quarterly or annual basis. The interest is compounded quarterly for deposits kept with the bank for six months or longer, increasing the overall returns for depositors.
Depositors may make withdrawals before maturity under the Sugam Term Deposits scheme in multiples of Rs 1, with a minimum withdrawal value of Rs. 1000 per transaction. Depositors can take partial withdrawals without having to break the entire deposit, and interest is still paid on the balance. Accordingly, the principal value of the Term Deposit Receipt is modified. Importantly, even partial withdrawals are not subject to charges.
Furthermore, there won’t be any charges levied if a depositor wants to withdraw their full deposit before it matures. In certain situations, the contractual interest rate or the scheme’s interest rate on the contractual date, whichever is lower, shall apply as the interest rate.