- Date : 08/06/2020
- Read: 7 mins
Everything you ever wanted to know about opening a Public Provident Fund (PPF) account.
The Public Provident Fund Scheme (PPF) was introduced in 1968 to mobilise small savings in the form of investment and allow investors to earn a safe return on it. To encourage investment the scheme also provides tax exemptions on the amount invested, the interest earned and on the final maturity amount redeemed. It is an ideal choice for anyone looking to make safe investments with guaranteed returns to build a retirement corpus while also saving on tax liability.
When introduced, the scheme was open to Individuals, Hindu Undivided Families (HUF’s), Association of Persons (AOP) and Non-Resident Indians (NRIs). But today only individuals can open a PPF account. The interest rate earned by the investment is decided on a quarterly basis and hence can fluctuate a bit over the long maturity period.
The salient features of PPF are:
• It carries a sovereign guarantee, and hence is among the safest investment options available
• It earns a healthy rate of interest
• It is tax-free
PPF scheme features
Tenure of the account: The minimum tenure of a PPF account is 15 years. It can be extended for a block of 5 years at the end of the tenure. You can extend it as many times as you require – but it would only be in blocks of 5 years. The extension can be made within a year of the maturity date. The 15-year maturity period is calculated based on the end of the year, and not the date of account opening.
Investment limits: A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited per year in your PPF account. A maximum of 12 deposits are allowed in a year, and at least one must be made each year to keep the account active.
Nomination: You can add a nominee to your PPF account at any time during its tenure or at the time of opening the account.
Loan/Withdrawal of amounts allowable: You can take a loan against your PPF account after it has been active for three years. The maximum loan allowed is capped at 25% of the closing balance of the previous year. Pre-mature withdrawal is allowed from the 6th year, under circumstances laid out by the PPF rules.
Eligibility criteria for opening a PPF account
To open a PPF account you should be:
- a resident individual
- a resident minor, in which case a legal guardian would open the account for the minor.
Remember that only one account is allowed per individual.
Further, accounts cannot be opened by HUFs, BOIs and AOPs starting May 13, 2005. Joint ownership of a PPF account is not allowed. NRIs cannot open a PPF account, but an individual who has become an NRI during the period of the account can continue investing in the same till the end of tenure.
Process of PPF account opening
You could apply either online or offline to open a PPF account. The process for both of these options is listed below.
To open a PPF account, just walk into a post office or bank of your choice and ask for Form A of PPF. You should also carry self-attested copies of an identity proof and an address proof to submit with the filled Form A. A minimum of Rs 100 is to be deposited while opening the account. You could make the first deposit either in cash or through a cheque.
Once you submit the application, along with the required document and the amount for the first deposit, the officer would issue a passbook for the new account to you. This will be used to capture the details of your PPF account including details of the deposits made, interest earned, total balance, details of any loans taken, and withdrawals made.
Some of the banks offer the facility to open a PPF account online. Please check with your bank to ensure that such a facility is available. While the KYC documents required to open the account remain the same as in an offline process, you would also need:
- to have an active savings account with the bank
- activate net banking facility on your account
- Aadhaar card details
Login to the net banking portal and select the option for opening a PPF account. Choose the savings account from which deposits will be made to the PPF account. Complete the Aadhaar based e-verification process to have your account opened.
Provided below is the list of banks with which you can open a PPF account:
Public Sector Banks:
- State Bank of India PPF
- State Bank of Travancore PPF
- State Bank of Hyderabad PPF
- State Bank of Mysore PPF
- State Bank of Bikaner and Jaipur PPF
- State Bank of Patiala PPF
- Allahabad Bank PPF
- Bank of Baroda PPF
- Bank of India PPF
- Bank of Maharashtra PPF
- Canara Bank PPF
- Central Bank of India PPF
- Corporation Bank PPF
- Dena Bank PPF
- IDBI Bank PPF
- Indian Overseas Bank PPF
- Oriental Bank of Commerce PPF
- Punjab National Bank PPF
- Union Bank of India PPF
- United Bank of India PPF
- Andhra Bank PPF
- Vijaya Bank PPF
- Punjab and Sind Bank PPF
- UCO Bank PPF
- ICICI Bank
- Axis Bank
- PPF Forms
Below are the details of various forms associated with PPF. You can use these forms to carry out actions listed.
|Forms Applicable for PPF
|Description of the Forms
|Links to PPF Forms
|To open a Public Provident Fund Account (PPF Account)
|To make deposits into/repay loans taken against a PPF account
|To make withdrawals from a PPF account
|To request a loan against PPF account
|To add a nominee to a PPF account
|To make changes to PPF account nomination information
|To claim funds in a PPF account by a nominee/legal heir