Why is Fixed Deposit The First Choice For Indian Investors?

For Indians, when it comes to investments, safety is as important as high returns.

A fixed deposit, like PNB Housing Finance FD, provides the right combination of high interest rates and optimal safety, making it a preferred choice for people willing to save for future financial goals.

So, what makes an FD like PNB Housing Finance FD so popular? Check the reasons here.

High Returns

Although fixed deposit interest rates may seem lower than other investment options like equity, PPF or SCSS, it offers more security than equity and higher liquidity than PPF or SCSS. When you invest in PPF, you cannot withdraw the full amount before the end of the deposit tenure. Moreover, SCSS investments are only for senior citizens. Although equity can offer you reasonably higher returns, there is no assurance that the market conditions would be favourable when you want to withdraw. PNB Housing Finance FD, on the other hand, provides assured returns of up to 6.95% every year. Hence, an FD can provide you with high inflation-adjusted returns without much risk.

Stable Monthly Income

PNB Housing Finance FD is available in two investment modes – cumulative and non-cumulative. The cumulative mode enables you to get an interest rate of up to 6.95%. However, if you need monthly income, you can choose the non-cumulative mode. The interest rate of a non-cumulative fixed deposit is usually 0.50% to 1% lesser than cumulative FD accounts. Non-cumulative FDs offer four interest options – monthly, quarterly, half-yearly, and annual.


An investor may close an FD account anytime they want. This facility can come in handy when the investor is facing a financial emergency and needs cash urgently. However, when you close an FD account prematurely, the financial institution may charge a 1-2% penalty.

Loan Facility

You can use a fixed deposit, such as PNB Housing Finance FDto apply for a loan in the case of an emergency. But remember, the loan amount should not exceed 75% of the principal amount, else the financial institution may reject your loan application. The rate of interest might be around 2% more than the highest fixed deposit interest rate.

Auto-Renewal and Auto-Maturity

Generally, a fixed deposit account like PNB Housing Finance FD comes with auto-renewal facility, where the principal gets automatically reinvested for the same duration as the original FD. If you want to withdraw the amount, you may opt for auto-maturity. In cases where there is no instruction from the investor, the amount gets automatically reinvested.

Optimal Safety

FDs from PNB Housing Financecome with CRISIL FAA+ and CARE AA rating, which means they are a secure investment option. Moreover, in order to receive public deposits, a housing finance company or non-banking financial company needs a license from RBI and the Ministry of Corporate Affairs, which increases the safety of these instruments.


Other than the three reasons mentioned above, an FD account also offers several benefits like easy account opening process, fast account creation, doorstep service delivery, nomination facility, and no TDS deduction on interest income of up to INR5,000. However, you can get all these features when you choose an FD from a reputed financial institution like PNB Housing Finance. Ensure that the financial institution you select gives the best fixed deposit interest rates and attractive terms before investing your hard-earned money.


Natraj Studied bachelor's degree in finance and business from Telangana University, Nizamabad. A Writer based In India, He has a degree in Charted Accounts and has very knowledgeable in credit repair and Banking Sectors. So, I decided to start a blog and share my knowledge to the visitors.

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