Fixed Deposits (FDs) are one of the safest and most preferred investment options for individuals looking to grow their savings with assured returns. If you are considering a 1-year FD, you might be wondering whether State Bank of India (SBI) or Punjab National Bank (PNB) offers a better interest rate. In this article, we compare their latest FD rates, key benefits, and factors you should consider before making an investment decision.
SBI vs PNB: Which Bank Offers Higher Interest
| Aspect | SBI (State Bank of India) | PNB (Punjab National Bank) |
|---|---|---|
| 1-Year FD Interest Rate (General Public) | 6.80% | 6.80% |
| 1-Year FD Interest Rate (Senior Citizens) | 7.30% | 7.30% |
| Special FD Rate for 400 Days | Not available | 7.25% (General) & 7.75% (Senior Citizens) |
| Minimum Deposit Amount | ₹1,000 | ₹100 |
| Maximum Deposit Limit | No upper limit | No upper limit |
| Premature Withdrawal | Allowed (with penalty) | Allowed (with penalty) |
| Tax Deducted at Source (TDS) | Applicable as per IT Act | Applicable as per IT Act |
| Loan Against FD | Available | Available |
| Ease of Account Opening | Online & Offline | Online & Offline |
| Auto-Renewal Facility | Available | Available |
For a standard 1-year FD, SBI and PNB offer identical rates at 6.80% (general) and 7.30% (seniors). However, PNB’s 400-day special FD at 7.25% (7.75% for seniors) provides better returns. Both banks offer secure and convenient investment options, and your choice should depend on factors like interest rate, deposit flexibility, loan availability, and withdrawal terms.
Understanding Fixed Deposits and Why They Matter
A Fixed Deposit (FD) is a secure investment instrument offered by banks where you deposit a lump sum for a fixed tenure at a predetermined interest rate. At the end of the tenure, you receive your principal amount along with accrued interest.
Why Choose a 1-Year FD?
A 1-year FD is an excellent short-term investment option for individuals looking for stability, liquidity, and guaranteed returns. It is ideal for:
- Those looking for better returns than a savings account.
- Investors who want a low-risk investment.
- Individuals who need access to funds within a short period.
see also: Income Tax on FD: New Tax Exemption Limits Announced by the Government
SBI vs. PNB: Detailed FD Rate Comparison
1. SBI Fixed Deposit Rates
SBI offers competitive interest rates for 1-year FDs:
- General Public: 6.80% per annum
- Senior Citizens: 7.30% per annum
Example: If you invest ₹1 lakh in an SBI 1-year FD at 6.80%, you will earn approximately ₹6,800 in interest.
2. PNB Fixed Deposit Rates
PNB also offers attractive interest rates for 1-year FDs:
- General Public: 6.80% per annum
- Senior Citizens: 7.30% per annum
- Special 400-day FD:
- General: 7.25% per annum
- Senior Citizens: 7.75% per annum
Example: If you invest ₹1 lakh in PNB’s special 400-day FD at 7.25%, you will earn approximately ₹7,916 in interest.
Additional Benefits of SBI and PNB Fixed Deposits
1. Loan Against FD
Both SBI and PNB allow customers to avail loans against their fixed deposits, typically up to 90% of the FD amount.
2. Auto-Renewal Facility
Investors can choose the auto-renewal option to automatically renew their FD after maturity at prevailing interest rates.
3. Flexibility in Interest Payout
Both banks offer monthly, quarterly, or cumulative interest payout options, allowing investors to choose based on their financial needs.
Factors to Consider Before Choosing an FD
1. Interest Rates & Returns
Both SBI and PNB offer 6.80% for the general public and 7.30% for senior citizens on a standard 1-year FD. However, PNB’s 400-day FD provides a higher return at 7.25% (general) and 7.75% (senior citizens).
2. Liquidity & Premature Withdrawal
Both banks allow premature withdrawal but charge a penalty, which may range between 0.50% to 1.00% of the interest rate.
3. Taxation on FD Interest
- Interest earned on FDs is taxable under “Income from Other Sources”.
- If interest exceeds ₹40,000 (₹50,000 for senior citizens) in a year, TDS is deducted at 10% (if PAN is provided) or 20% (if PAN is not provided).
4. Ease of Investment
- SBI FD can be opened online via Internet Banking, at a branch, or through the SBI YONO app.
- PNB FD can be opened via PNB ONE App, Net Banking, or at a branch.
see also: SBI Amrit Vrishti FD Scheme: Get the Best Fixed Deposit Interest Rate
SBI vs PNB: Which Bank Offers Higher Interest FAQs
1. Which bank gives the highest interest rate for a 1-year FD?
Both SBI and PNB offer 6.80% for the general public and 7.30% for senior citizens. However, PNB’s special 400-day FD offers 7.25% for general and 7.75% for senior citizens.
2. Can I withdraw my FD before maturity?
Yes, both SBI and PNB allow premature withdrawal, but a penalty of 0.50% to 1% may apply.
3. Is FD interest taxable?
Yes, FD interest is taxable under Income from Other Sources. TDS is deducted if interest income exceeds ₹40,000 (₹50,000 for seniors) in a financial year.
4. Can I take a loan against my FD?
Yes, both banks allow loans against FD, usually up to 90% of the FD value.
5. Which bank is safer for FDs?
Both SBI and PNB are government-backed banks and offer equal levels of safety for deposits.
