Punjab National Bank (PNB) has launched its Monthly Income Fixed Deposit (FD) option for 2026, catering to investors who prefer a regular cash flow instead of waiting for a lump-sum payout at maturity. This FD scheme is particularly attractive for retirees, pensioners, and conservative savers who need predictable monthly income to manage household expenses, medical costs, and other recurring payments.
The PNB monthly income FD allows depositors to keep their principal intact while receiving interest payouts every month. This structure ensures capital safety while providing a steady source of income throughout the tenure.
Interest Rate and Tenure Options
The PNB monthly income FD comes with flexible tenure options ranging from 1 year to 5 years, depending on the depositor’s financial needs. Interest rates for mid-term deposits are expected to range from 6.75 percent to 7.25 percent annually. Senior citizens enjoy an additional 0.50 percent benefit, which increases their effective interest rate to around 7.25 percent to 7.75 percent depending on tenure.
Interest is calculated quarterly but credited monthly under the non-cumulative payout option. This ensures regular income for depositors without reducing the principal amount.
How the Monthly Interest Payout Works
Under the monthly income FD scheme, interest earned is automatically credited to the depositor’s linked savings account at the end of each month. The principal remains untouched until the end of the tenure, making it a perfect choice for pensioners and individuals seeking a predictable financial cushion.
For instance, depositing ₹3 lakh at an interest rate of 7.00 percent can generate approximately ₹1,750 to ₹1,850 per month before tax. Senior citizens enjoying the additional 0.50 percent rate may receive slightly higher monthly payouts. This steady cash flow allows depositors to cover monthly expenses without dipping into their savings.
Safety and Deposit Protection
PNB monthly income FDs are backed by one of India’s trusted public sector banks, offering strong government ownership support. Deposits are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to the prescribed limit per depositor. Compared to corporate FDs, public sector bank deposits provide higher capital safety, though the interest rate may be slightly lower than high-risk alternatives.
This makes the PNB monthly income FD ideal for conservative investors who prioritize the safety of their capital while earning predictable returns.
Taxation and Withdrawal Rules
Interest earned from PNB FDs is taxable according to the depositor’s income tax slab. TDS may apply if annual interest exceeds the prescribed threshold and PAN details are updated. Premature withdrawal is allowed but generally comes with a penalty, reducing interest by approximately 0.50 percent to 1.00 percent depending on the tenure.
Investors should carefully review the withdrawal rules before finalizing their deposit to avoid any surprises. Choosing the monthly payout option ensures consistent income while maintaining liquidity and control over funds.
Expected Returns and Suitability
A ₹3 lakh deposit under the PNB monthly income FD at 7.00 percent interest can generate around ₹1,750 to ₹1,850 per month. Senior citizens benefiting from the extra 0.50 percent can see slightly higher monthly income. Over the full tenure, the principal remains intact, giving depositors both security and a dependable source of monthly cash flow.
This FD scheme is particularly suitable for retirees, pensioners, and anyone who relies on fixed income for managing monthly expenses. Its combination of safety, predictable returns, and flexible tenure options makes it a reliable addition to a conservative investor’s portfolio.
Final Verdict
The PNB Monthly Income FD 2026 is a practical solution for individuals seeking regular monthly interest along with the safety of principal. With competitive interest rates, additional benefits for senior citizens, and monthly payout options, it provides stability and predictable financial planning for households and retirees. For conservative investors who prioritize steady income over market-linked returns, this scheme offers a secure and efficient investment vehicle.
Disclaimer
Interest rates, senior citizen benefits, monthly payout structures, premature withdrawal penalties, and taxation rules are subject to official PNB circulars and RBI regulations. Investors should confirm current details at authorised PNB branches before investing.
