A Punjab National Bank bond can be a senior infrastructure bond, a Tier 2 bond, or an AT1 bond. While all are issued by the same bank, they differ in maturity, safety, rating, and what can happen if the bank faces severe financial stress. The right choice depends on whether you value a fixed maturity date and lower risk or are comfortable taking on more risk for a potentially higher yield.
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PNB Bond Types at a Glance
| Instrument | Issuer | Indicative yield/coupon | Rating | Main thing to know |
| Senior infrastructure bonds | Punjab National Bank | Varies by ISIN; check current market yield. | AAA (ICRA/CARE/CRISIL) | Simplest and safest of the three; no PONV write-down risk. |
| Tier 2 bonds | Punjab National Bank | Varies by ISIN and maturity | AAA (CRISIL) | Paid after senior bondholders; PONV write-down risk. |
| AT1 bonds | Punjab National Bank | Example: 8.40% coupon on AT1 Series XIII | AA+ (ICRA/CRISIL) | No fixed maturity; interest can be skipped; highest write-down risk. |
Old PNB Bonds and Unclaimed Money
If you hold an older PNB bond, first check whether it is in demat form or held as a physical certificate. Make sure your registered bank account, mobile number, and email are up to date.
For demat holdings, interest and repayment amounts are usually credited directly to your registered bank account. So, updating those details is the first step. If you have a physical certificate, contact PNB’s investor-support team or the registrar mentioned on your certificate, with the certificate and identity documents. If the certificate is lost, ask the registrar what documents and process it requires for a duplicate certificate.
PNB also lists a nodal officer for IEPF-related matters, whom investors can contact for help with unclaimed amounts. If interest or repayment money remains unclaimed for seven years, it may be transferred to the Investor Education and Protection Fund, or IEPF. Investors can then file a claim through Form IEPF-5 on the IEPF website, along with the required documents. For physical bonds, the original certificate is usually needed; PNB’s IEPF nodal officer can guide investors on the submission process.
The Modern PNB Debt Spectrum
PNB’s current bonds fall into three broad groups:
- Senior infrastructure bonds: The simplest and usually safest type.
- Tier 2 bonds: These rank below senior bonds if the bank runs into serious trouble.
- AT1 bonds: These are the riskiest type and can be written down if the bank becomes non-viable.
PNB’s ratings reflect this difference. Its infrastructure bonds carry AAA ratings from ICRA, CARE and CRISIL, while its AT1 bonds are rated AA+ by ICRA and CRISIL. In simple terms, AAA is a higher safety rating than AA+.
PNB Senior Infrastructure Bonds
Senior infrastructure bonds are regular PNB bank bonds. They sit ahead of Tier 2 and AT1 bonds if the bank is wound up. They also do not carry the special “write-down” rule that applies to AT1 bonds. Like other bank infrastructure bonds, they must have a minimum maturity of seven years under RBI rules.
ICRA has reaffirmed AAA (Stable) ratings on PNB’s infrastructure bonds, while CRISIL has assigned AAA/Stable to PNB’s ₹3,000 crore infrastructure bond programme. For a buyer in the secondary market, the coupon is only the starting point. The yield is the number to compare.
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PNB Tier 2 Bonds
Tier 2 bonds are subordinated bonds. In simple words, if the bank is wound up, senior bondholders and depositors are paid before Tier 2 bondholders.
These bonds also have a Point of Non-Viability (PONV) rule. If the RBI decides that the bank cannot survive without emergency support, Tier 2 bonds can be written down or converted into shares. This is rare, but it is a serious risk.
PNB’s Tier 2 bonds carry a CRISIL AAA/Stable rating. A high rating is reassuring, but it does not remove subordination or PONV risk. Always check the details of the exact bond you are buying, including its maturity date, call date, and terms.
PNB AT1 Bonds and the PONV Walkthrough
AT1 bonds are the most complicated type of bank bond. They are also called Additional Tier 1.
bonds. Unlike normal bonds, they do not have a fixed maturity date.
- No fixed end date: AT1 bonds are perpetual. The bank may have a call option to repay them early, but if it does not, investors usually have to sell in the market to exit.
- Interest can be skipped: The bank can choose not to pay interest in some situations without this being called a default.
- Write-down risk: If the RBI says the bank is not viable, AT1 bonds can be written down fully or partly, or converted into shares. This can happen before senior bondholders and Tier 2 bondholders face losses.
- Lower rating: PNB’s AT1 bonds are rated AA+ by ICRA and CRISIL, lower than the AAA rating on its infrastructure bonds.
- Limited access: Since SEBI’s 2020 rules, individual and HNI investors generally cannot buy new AT1 bonds directly. They can usually buy them only in the secondary market, often in large quantities.
For example, PNB’s AT1 Series XIII bond, ISIN INE160A08209, carries an 8.40% annual coupon and has a call option date of 9 December 2026. A call date is the date from which the bank can choose to repay the bond; it does not guarantee repayment on that date. The higher interest rate on AT1 bonds is compensation for these extra risks, not a guaranteed upgrade over safer senior bonds.
How to Buy and Tax
You can buy listed PNB bonds through a broking platform in the secondary market. You can also apply when the bank launches a new bond issue, though such opportunities are not always available.
You can also compare similar options and browse AAA-rated bank and NBFC NCDs on GoldenPi and check the coupon, tenure, and rating side by side before you invest.
Interest earned from bonds is usually taxed at your income-tax slab rate. If you sell a bond before maturity, the tax on any gain depends on how long you held it and the tax rules at the time of sale. Before buying, check the bond’s ISIN, face value, interest payment frequency, maturity date, call date, rating, and how easily it can be sold in the market.
Which PNB Bond Fits?
If your main goal is safety and getting your principal back on a fixed date, senior AAA infrastructure bonds are usually the clearer choice. If you understand and accept the extra risk, Tier 2 bonds may offer a higher return. AT1 bonds are suitable only for investors who fully understand that they are perpetual and can face write-downs.
Frequently Asked Questions
Senior bonds are paid first if the bank is wound up. Tier 2 bonds are paid after senior bonds, while AT1 bonds are perpetual and can be written down if the bank becomes non-viable.
Yes. PNB can choose not to pay interest on AT1 bonds in certain situations without this being treated as a default.
PONV stands for Point of Non-Viability. If the RBI decides a bank cannot survive without emergency support, Tier 2 and AT1 bonds can be written down or converted into shares.
Check whether your bond is in demat or physical form, update your bank and contact details, and contact PNB or the registrar with your bond details. If the money has moved to the IEPF, file Form IEPF-5 on the IEPF website.
Interest is generally taxed at your income-tax slab rate. If you sell a bond before maturity, capital-gains tax may apply depending on how long you held it.
Disclaimer
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
