India’s 2nd Largest PSU Bank Hikes Fixed Deposit (FD) Rates By 60 Bps; Check Effective Date

The second-largest public sector bank in India, Punjab National Bank (PNB), which has a storied 130-year history, hiked the interest rates on bulk fixed deposits (FDs) from Rs. 3 Cr to Rs. 10 Cr. The latest bulk FD rates, according to the bank's official website, go into effect on December 13, 2024. Following the modification, the bank is now providing a maximum return of 7.50% after increasing interest rates by up to 60 basis points across a variety of tenures.

PNB Bulk FD Rates

The bank is giving a 6% interest rate on bulk domestic term deposits that mature in 7-45 days, while PNB will continue to pay a 6.40% interest rate on those that mature in 46-60 days. PNB has increased its interest rate by 50 basis points from 6.50% to 7% on a deposit term of 91 to 179 days, while it would still pay an interest rate of 6.60% on a fixed deposit period of 61 to 90 days.

PNB bulk deposits that mature in 180 to 270 days will now fetch an interest rate of 7.25%, up 60 basis points from 6.65% before, while those that mature in 271 days to 1 year will now fetch an interest rate of 7.25%, up 50 basis points from 6.75% previously.

The bank will pay an interest rate of 7.50% on bulk deposits that mature in one year, which is 25 basis points more than the previous rate of 7.25%. Meanwhile, PNB will continue to pay an interest rate of 6.80% on deposits that mature in one to two years. For bulk fixed deposit tenures of two years to three years and three years to 1203 days, respectively, PNB will continue to pay interest rates of 6.50% and 6.25%. The interest rate on PNB bulk term deposits that mature in 1204 days will remain at 6.15%, while the interest rate on deposits that mature in 1205 days to 5 years will remain at 6.25%.

PNB will continue to pay an interest rate of 5.60 percent on bulk deposits that mature in 5 years to 1894 days, and 5.45 percent on those that mature in 1895 days. PNB will keep making interest payments at a rate of 5.60 percent for 1896 days to 10 years.

"The rates for Rs.3 Crore to Rs.10 Crore are not to be loaded with additional rate of interest for Sr. Citizens, staff accounts etc," mentioned PNB on its website.

CRISIL Ratings recently maintained its "CRISIL AAA/CRISIL AA+/Stable/CRISIL A1+" ratings on the current debt instruments and issued its "CRISIL AAA/Stable" rating to Rs 3,000 crore Tier II bonds (under Basel III) of Punjab National Bank (PNB) on 13th December.

With gross advances of 10,61,904 crore as of September 30, 2024, compared to Rs 9,83,325 crore as of March 31, 2024, PNB is the third-largest public sector bank in India, with a market share of about 5.8% according to CRISIL. With deposits of Rs 14,58,342 crore as of September 30, 2024, compared to Rs 13,69,713 crore as of March 31, 2024, it is the second-largest public sector bank, CRISIL reported. As of September 30, 2024, the bank's deposit base has grown to Rs 14,58,342 crore. As of September 30, 2024, the domestic CASA ratio was around 39%, down from approximately 41.4% on March 31, 2024. Furthermore, as of June 30, 2024, savings and term deposits (less than Rs 2 crore) accounted for around 79.8% of all deposits. In the second quarter of fiscal 2025, the cost of domestic deposits shot up from 4.89% in fiscal 2024 to 5.16%.

CRISIL said in a report that it believes PNB will maintain its strong market position in the financial services sector in India and will continue to benefit from strong support from GoI.