Public Provident Fund (PPF) launched in 1968 is amongst the most secured form of investment. This 15 year long scheme was launched by the Indian government for any Indian citizenship holder. Here are some of the most beneficial features of PPF:

Minimum Investment: Rs. 500 per annum

Maximum Investment: Rs. 1,50,000 per annum

Maturity Period: 15 years

Interest Rate (as on Mar’24): 7.1% compounded annually

Income Tax Benefits: Yes, maximum of 1.5 Lakhs rupees

Personal Loan on PPF Balance

Not many PPF account holders are aware of personal loan against PPF and that the interest rate is very low compared to a traditional personal loan offered by various lenders. Therefore, in cases of emergency, PPF account holders can avail personal loan which saves lot of money. In this article, we will discuss details on personal loan on PPF including the terms and conditions, interest rates and the application process.

How to Apply for Loan on Public Provident Fund Account?

Minimum PPF Account Period: Only applicable to the investors whose account is at least 1 year old.

Loan Quantum Available: 25% of the PPF amount deposited. So if you’ve Rs. 5,00,000 (5 lakhs) in your PPF account, the loan amount eligible is Rs. 1,25,000.

Can loan be applied after 5 years?: No. But you can withdraw the funds partially.

Number of times loan can be applied: One. If previous loan is fully repaid then also you cannot re-apply for the loan.

Benefits and Interest Rate on PPF Loan:

The two most financially beneficial reasons to apply for this loan especially when the required loan amount is small are

1. No security required: There is no need to keep gold or property as a security. This is because the loan is offered against the balance in your PPF account.
2. Low interest rate: Compared to the traditional personal loan with high interest rate, loan on PPF account carries less interest rate. Typically the interest rate in this case is only 1% higher than the interest rate offered on the PPF account. If the interest rate offered on PPF is 7.1% then the personal loan interest rate will be 8.1% which is extremely less compared to personal loan taken from financial institution which charges average 15% interest.

PPF Personal Loan Repayment

The loan term is 36 months. To avoid penalty, borrower needs to repay principal + interest within 36 months. Failure to do so will result in an increase in the interest rate by 6% than the interest rate earned on the PPF account. To begin with borrower has to repay the principal amount and then the interest calculation is done based on the repayment period.

How to Apply for PPF Personal Loan?

• Applicant needs to visit bank branch or post office where the PPF account is opened.
• Fill the loan application form. If applicant has PPF account at State Bank of India (SBI), then he/she will have to fill Form D.
• You will need to mention the required loan amount and the repayment period.
• Submit PPF passbook.
• The application will then go in the review stage and the final decision is given within a week.

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].