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Public Provident Fund Demystified

Updated: Jan 12, 2022

by Namrata Singh, CFP & Chaitali Shah, MA (Economics)

Public Provident Fund (PPF) was introduced in India in 1968 with the objective to mobilize small savings in the form of investment. The scheme is fully guaranteed by the Central Government.

A PPF account can be opened with either a Post Office or any nationalized bank like the State Bank of India or Punjab National Bank, etc. Even private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility. Investments in PPF can be done online through most banks.

Note: Only Residents Individuals can invest in PPF (NRIs and HUFs are not eligible for investments). The interest rate on PPF is reviewed every quarter by the Government.

Interest Calculation

The lowest balance at the credit of a PPF account between the close of the 5th day and the end of the month shall be eligible for interest. Interest shall be credited to the account at the end of each year.

Loan against PPF

You can take a loan against your PPF account between the 3rd and 6th year. The maximum tenure of the loan is three years (36 months).

The loan amount can be a maximum of 25% of the total available amount at the end of the second year immediately preceding the year in which the loan is applied for. An account holder shall be entitled to only one loan in a year as long as the earlier loans and interest are fully repaid.

PPF withdrawal

An account holder can withdraw prematurely, up to a maximum of 50% of the amount that is in the account at the end of the 4th year (preceding the year in which the amount is withdrawn or at the end of the preceding year, whichever is lower). Further, withdrawals can be made only once in a financial year.

One can fully withdraw the PPF account balance only upon maturity i.e., after the completion of 15 years. Before 15 years, the scheme permits partial withdrawals from year 7 i.e., on completing 6 years.

Renewal Facility

After the maturity period of 15 years is over, PPF can be renewed indefinitely for a block of 5 years at the prevailing interest rate. The option of extension of the account shall be made by the account holder before the expiry of one year from the maturity of the account. No deposits can be made in the account if the account holder fails to give his option to continue the account within one year from the date of maturity.

Investments lying in the PPF account are not subject to attachment under any order or decree of any Court in respect of any debt or liability incurred by the account holder.

PPF is a low risk and tax-efficient investment vehicle that enables you to build a retirement corpus or fulfil other long-term goals. If you are a self-employed individual and you do not have access to the Employees’ Provident Fund, PPF is an excellent investment option for you.


Namrata Singh is a Certified Financial Planner with more than 13 years of experience in banking and wealth management. (

Chaitali Shah, MCom & MA (Economics) was a Financial Economics – Faculty at Wilson College, Mumbai (

(Please note all views are personal)

This blog was first published on Desh Gujurat

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