Public Provident Fund

Posted by  Fintra Editor , June 17, 2018

Public Provident Fund

Public Provident Fund, PPF in short, was first introduced by the National Savings Institute of the Ministry of Finance in the year 1968. It is a scheme that helps save both your finance and taxes.

The main purpose of PPF to mobilize small-scale savings accounts with the lure of an investment opportunity that will provide good returns as well as tax exemption. PPF happens to be a long-term investment scheme. The minimum and maximum investment amounts are Rs. 500 and Rs. 1,50,000 respectively, in one financial year.

Loan facilities are available and premature withdrawal and extension of the account are allowed. PPF scheme is fully supported by the Indian Government.



PPF account can be opened both offline and online. To open a PPF account offline, you have to approach either a post office or a bank. Now, remember, PPF facility is not available in every bank but only a designated few such as State Bank of India, ICICI Bank, Punjab National Bank, etc.

To open a PPF account at a designated branch, you need to submit documents such as ID proof, address proof, recent passport size photographs, and your pay-in-slip. Now you have to complete the following steps-

To open a PPF account via the internet, you have to go through the following steps-



By investing in a Public Provident Fund Scheme, you will be able to enjoy the following benefits-

  1. The Government of India backs PPF schemes, so it is a completely safe venture. Also, PPF comes in with a lock-in period of 5 years. Hence the return is increased as well as secure.
  2. A PPF account is eligible for tax deductions under Section 80C. The interest and the matured amount are both tax exempted.
  3. The minimum investment amount of a PPF is Rs 500, keeping it within the reach of people with low income.
  4. PPF allows you to enjoy loan facilities, right from the beginning. Premature withdrawal is allowed after five years.
  5. After the 15-year maturity period of a PPF scheme, the investor can choose to continue the account for another five years if he or she wishes so.



Like everything else, the Public Provident Fund Scheme too has its drawbacks. The disadvantages of PPF are listed here as follows-

  1. The Hindu Undivided Family (HUF), NRIs, or any Trust are not eligible to open a PPF account.
  2. The liquidity in a PPF is considerably less than other similar investment schemes.
  3. The lock-in period of a PPF account is a long and tenuous period of 15 years. So, if you are looking to make some quick money, PPF is definitely not for you.
  4. PPF account has an upper investment limit of Rs 1.5 lakh a year which prevents the subscriber to invest a large amount of money, even if he is able to.
  5. Public Provident Fund does not allow any joint account.


The current rate of interest of a PPF account is 7.6% per annum. However, the State Bank of India offers a higher rate of 8.7% per annum.


PPFs have a lock-in period of 15 years. Previously, no premature closure was allowed except in the case of the death of the investor. However, nowadays the rules have become lax.

Premature closure is now granted in case of a serious disease of the investor, spouse, or dependant children. In the case of higher education of a minor account holder, premature closure will be permitted but only if the legitimate documents are produced.

Premature withdrawal is allowed only after five years of completion of the account. Withdrawal can be as much as 50% of the account balance.

So, this was all that you needed to know about Public Provident Funds. Hopefully, you have found this article to be helpful and informative enough.