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  • Public Provident Fund Withdrawal Rules and Process

    The Public Provident Fund (PPF) Scheme has very strict and specific rules set down in relation to when an amount can be withdrawn from the account.

    The PPF account can only be fully withdrawn from on maturity (15 years) from the date of creation. In cases of financial emergency, the subscriber can opt for partial withdrawals in order to meet emergency expenses. These withdrawals are subject to certain rules.

    Know Public Provident Fund(PPF)Withdrawal Rules

    When Can Partial Withdrawals Begin?

    • Partial withdrawals can be made, from the start of the 7th financial year after the account has been created.

    It is important to keep in mind that the timeframe taken into consideration is “financial year” which is from the 1st of April – to the 31st of March the next year.

    For example, if Mr. A has created a PPF account in January 2010, he will only be able to withdraw from his account from the 1st of April 2015.

    Mr. A’s PPF account was opened in January 2010, which means that it was opened in the financial year 2009 – 2010. The number of financial years, counted from when he opened the account will be as follows:

    • Year 1: April 2009 – March 2010 (Account opened within this timeframe – in January 2010).
    • Year 2: April 2010 – March 2011.
    • Year 3: April 2011 – March 2012.
    • Year 4: April 2012 – March 2013.
    • Year 5: April 2013 – March 2014.
    • Year 6: April 2014 – March 2015.
    • Year 7: April 2015 – April 2016 (Mr. A can begin withdrawing from his PPF account from this date).

    How Many Partial Withdrawals are Allowed Per Financial Year, Starting From The 7Th Financial Year after The PPF Account Creation?

    • Only one partial withdrawal will be allowed every financial year (starting from the 7th financial year onwards).

    Considering the above example of Mr. A, he will only be able to withdraw from his PPF account once every year, starting from April 2015.

    How Much of an Amount can be Withdrawn Once a Year, Starting From The 7Th Financial Year After PPF Account Creation?

    • The amount that can be withdrawn is equal to the lower of:
      • 50% of the account balance as at the end of the year immediately preceding the current year, or,
      • 50% of the account balance as at the end of the 4th year, immediately preceding the current year.

    As in the above example with Mr. A:

    • Year 1: April 2009 – March 2010 (Account opened within this timeframe – in January 2010).
    • Year 2: April 2010 – March 2011.
    • Year 3: April 2011 – March 2012 (This is the 4th year immediately preceeding the year in which withdrawals are possible, assuming Mr. A opted for withdrawal option as soon as he legally could. Mr. A can withdraw an amount equal to 50% of this amount if it is lower than that of “Year 6”).
    • Year 4: April 2012 – March 2013.
    • Year 5: April 2013 – March 2014.
    • Year 6: April 2014 – March 2015 (This is the year immediately preceding the year in which withdrawals are possible, assuming Mr. A opted for the withdrawal option as soon as he legally could. Mr. A can withdraw an amount equal to 50% of this amount, if it is lower than that of “Year 3”).
    • Year 7: April 2015 – April 2016 (Mr. A can begin withdrawing from his PPF account from this date).

    What is the PPF Maturity Duration?

    • The PPF account attains maturity in 15 years from the date on which it was created.

    Is it Possible to Prematurely Close PPF Account?

    • No, a PPF account cannot be prematurely closed for any reason except the death of the account holder.

    Key Points to Know about PPF Accounts

    Public Provident Fund is a government initiated long term investment scheme which accumulates regular interests on the deposited amount. The rate of interest payments in PPF are comparatively higher than other fixed and recurring deposit schemes of banks. PPF investments range from Rs.500 to Rs.1,50,000 and it comes with a lot of benefits including tax exemption. The scheme allows for partial withdrawals in times of emergency but the option of complete withdrawal is available only after 15 years from the date of enrollment.

    • PPF account allows one to make complete withdrawals only after the policy attains maturity i.e., at the end of the 15th year.
    • The interest rates on PPF accounts are notified by the government from time to time and for the fiscal year 2016 it is 8.7% per annum.
    • Partial withdrawals are allowed only after completion of five years from the date of initial subscription.
    • The maximum amount that one can deposit in a PPF account is Rs.1.5 lakhs.

    How to Check Your PPF Account Balance

    If you have enabled net banking, then you can check your PPF balance in a few quick steps. Just login to the bank’s website using your credentials and under the PPF section click on balance information. It will list out all the details pertaining to deposits made, interests accrued, and the current PPF balance. Some banks also provide the option of linking your PPF account to a different savings bank account. But generally, PPF accounts and savings accounts are maintained by the same bank. Apart from checking your PPF balance, the banking portal allows you to transfer funds online. The online facility also allows you to give standing orders so that a fixed amount will be deposited to your PPF account on a regular basis.

    So if you haven’t received the internet banking kit from your bank yet, apply soon as it will help you save a lot of time on paperwork. With internet banking, you need not visit the bank each time you wish to check your PPF account details. Except for the changes in user interface and layout, the procedure to check PPF balance remains same for most of the banks,. However, if you maintain your PPF account with a post office, you may not be able to check your balance online for all the branches. In such cases, visit the respective post office branch with your passbook and request for PPF account details. It is to be noted that not all post office branches have the PPF facility.

    Knowing your PPF Withdrawal Status

    Similar to checking your PPF account balance, you can have all the information related to withdrawals by simply accessing your bank account through internet banking. Checking the claim status online is possible only in the banks which accept online deposits. For post office accounts, you will need to visit the branch in person and file a request to know your PPF withdrawal status.

    PPF Accounts Features

    Feature Description
    The level of reliability Maintained by the government, hence it’s highly reliable
    Type of investment Small to medium
    Investment tenure 15 years
    Minimum deposit for account opening Rs.100
    Minimum yearly deposit Rs.500
    Maximum yearly deposit Rs.1,50,000
    Installments of payments 12 per year
    Tax benefits Investments up to Rs.1,50,000 are fully exempt from tax.

    Loan Facility for PPF Accounts

    PPF loans are one of the best options to finance your short term requirements. If you compare personal loans offered by banks with that of PPF loans, the latter proves to be much beneficial in terms of interest rates. The interest rates on bank offered personal loans can be anywhere from 14% to 21%, whereas PPF loans are available at rates below 11% per annum. Given below are the key benefits of PPF loans:

    • The rate of interest on loans is roughly 2% more than the interest offered on the deposits. The Ministry of Finance has set the interest rate on deposits for this financial year at 8.7% per annum.
    • Similar to personal loans, the borrower does not have to pledge his assets for obtaining a PPF loan.
    • PPF subscribers can apply for loans only between the 3rd and 5th financial year from the date of enrollment. But the loan facility will be discontinued from 7th year.
    • The loan sanctioned will always be 25% of the PPF balance in account at the end of the fiscal year that preceded the application year.
    • The principal amount is to be repaid within 36 months, either as lump sum or as periodic installments.
    • Only after repayment of the first loan can one apply for a second loan.

    Premature Withdrawal of PPF

    As already mentioned, PPF is one of the best methods to save on taxes and enjoy other long term benefits. The scheme allows partial withdrawal right after the completion of the 5th fiscal year. The option for premature withdrawal proves to be useful at times of financial emergencies such as medical treatments and higher education of children. As per the PPF withdrawal rules, the subscriber can withdraw only 50% of the accumulated amount by the 5th year of investment. But where the account holder has invested between 7 years and 12 years, the permissible limit on withdrawal is higher. Subscribers can apply for partial withdrawals using Form C through the bank where they maintain their PPF account. In the Declaration section of the form, the applicant will have to fill in information such as account number and the amount to be withdrawn. In addition to that, they should also specify the number of years completed from the date of initial subscription.

    However, on completion of 15 years, subscribers are eligible for complete withdrawals. In case an account holder chooses to leave the amount unwithdrawn, then he/she can extend the term for periods of 5 years each and avail the same interest rates and other benefits including tax exemption. It is to be noted that premature closure of the PPF account is possible only in case of death of the individual.

    PPF withdrawal forms

    Form A For PPF account opening
    From B Account deposit slip used for fund deposits or loan repayments
    Form C Form for partial withdrawal request
    Form D Form for PPF loan request
    Form E For adding PPF nominee
    Form F Change in nomination of the PPF account
    Form G Claim settlement form (in case of account holder’s death)
    Form H Form for extension of term period after maturity

    PPF Withdrawal from SBI

    As discussed above, the PPF withdrawal rules are same for withdrawing from SBI or any other bank in India. SBI account holders can partially withdraw after completion of 5 years and the maximum withdrawal limit is 50% of the amount retained in the preceding year. But additionally, SBI offers a wide range of benefits including easy transfer of PPF account to any of its branches and online access.

    List of Banks Providing PPF Facility

    The following banks allow customers to open PPF accounts in India. However, it is to be noted that not all branches of these banks are authorized to do so. Therefore, kindly check the branch details of the bank you intend to open a PPF account.

    • SBI and its subsidiaries
    • ICICI bank
    • Union Bank of India
    • IDBI
    • Vijaya Bank
    • Allahabad Bank
    • Oriental Bank of Commerce
    • Bank of Maharashtra
    • Canara Bank
    • Punjab National Bank
    • United Bank of India
    • Axis Bank
    • Indian Overseas Bank
    • Indian Bank
    • Corporation Bank
    • Dena Bank
    • Bank of Baroda
    • Central Bank of India
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