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