PPF-Loan and Withdrawal

Today I am going to make you familiar with rules and regulations PPF loan and withdrawal. I felt it necessary as a lot of PPF investors not aware about exact rules of loan and withdrawal. Even I too faced difficulty in understanding these basic things during my CFP preparation.

Suppose you opened the account on 22/12/2011 and below table will give you simple example when you can withdraw and take a loan. If you add 15 yrs (Term of PPF account) to your account opening date it will be 22/12/2026 which you think maturity date. However, it will mature on 1st April 2027 (which is first working day of FY 2027-28). Therefore, it is exactly not 15 years but in practical it is around 16 years.

Loan and Withdrawal

Withdrawal will be available from seventh FY onward. Only one withdrawal is permissible. The amount of withdrawal will be lower of-immediately preceding fourth FY balance or immediately preceding FY balance. Therefore, from the above table you may have noticed that a loan will be available from 3rd FY to 6th FY. That is 25% of the year-end balance preceding 2 yrs of loan taking FY. You will have to repay a loan within 36 months and interest is more than what you are getting from PPF account. You will not get one more loan until you repay the existing loan. From seventh FY you are not eligible to take a loan.

Note-Effective from 1st April, 2016, one can close the PPF before the maturity. But this will be permitted in genuine cases like a serious ailment, higher education of children etc,. In addition, if you try to close the PPF before maturity, then there will be a 1% reduction overall amount as penalty. This closure is allowed only to those accounts, which completed minimum 5 years of a term.

1% reduction of interest from a whole amount as penalty for earlier closure is unwarranted. Because it is already set that such closure will be allowed in genuine cases. Then why such penalty clause?

Hope my sharing will help you all 🙂

113 Comments

  1. Sir,
    I have opened my PPF Account in SBI (2008)
    Now There is Amout is Rupees 11 lac,
    I have no job for last 6 month and then I need money for home & Education.
    Pl suggest me Sir, What I should do?
    Pl guide me?
    Thanks

    Reply
    • Dear Ram,
      You can opt for either loan or withdrawal as per above post.

      Reply
  2. Hi Basavraj,

    I opened PPF account with SBI on 3Jan 2012 which is maturing on 1Apr 2027. Two months back I moved abroad on a permanent basis.

    My Questions are:
    1. Can I withdraw the entire amount ONLINE and close the PPF account.

    2. if not possible ONLINE, what are other alternatives?

    3. Can my family member or friend do this (Withdraw money and close ac) on my behalf by visiting SBI branch in India. If yes, then what is required from my end and can they visit any SBI branch in Inidia or where my PPF a/c is held?

    Thanks

    Reply
    • Dear Gurwinder,
      1) You have to wait up to maturity for the closure.

      Reply
      • Ok,
        1. Can I withdraw partial amount online.
        2. if not online, can my family member withdraw partial amount on my behalf and what is required from my end.
        3. if family member can withdraw on my behalf, Do they need to visit home or any SBI branch?
        Thanks in advance.

        Reply
        • Dear Gurwinder,
          Sadly you can’t withdraw it online and family members are also not allowed.

          Reply
  3. Sir can I redeposit money withdrawn from ppf account… kindly clarify

    Reply
    • Dear Shabir,
      Yes but if you are repaying such advance, then you can always redeposit.

      Reply
  4. I have open a PPF account at SBI.15yrs. completed on1.04.2011.extended 5yrs + another 5yrs. Now maturity date is 1.04.2021.
    Became job less creature, Very badly I need money to survive. Can I close my PPF account & withdraw money ? if yes then how please.
    kindly help me asap.

    Reply
  5. Sir,
    What is time gap required to pay PPF loan Interest amount after payment of Principal amount?

    Reply
    • Dear Naidu,
      Nothing like that. At maturity, you will receive both interest and principal.

      Reply
  6. I opened a ppf account in 2010 in an SBI branch in Hyderabad. I wish to do partial withdrawal now. But I’ve relocated to Bangalore. Can i do the partial withdrawal from any SBI branch in Bangalore. What is the procedure for that?

    Reply
  7. I have an EPF account but as the current employer has no EPF provision so I have not contributed any amount towards my EPF a/c since last two years.As I am planning to purchase a flat so please suggest whether i would close the EPF a/c by withdrawing the total accumulated amount or continue the EPF a/c with partial withdrawal.

    Reply
  8. Dear Sir can you tell me SBI ppf loan product code.

    Reply
    • Gajesh-PPF loan rules apply to all bank and Post Office. There is no special rules for SBI.

      Reply
  9. thanks a lot sir for sharing this information i am holding PPF account in SBI bank since 1 year . i was searching for loan against the balance accumulated in my account.

    Reply
    • Sir Ppf ac opening date was july 2006 amount till date july 2020 is 450000.Bank says i am elegible only 147000 out of it.Plz guide.
      Thanks

      Reply
      • Dear Dhananjay,
        Let them give in writing and cross-check with what I have shared in the above post.

        Reply
  10. Hi ,

    I have a PPF a/c with SBI since 2012 March, I have current balance of 5,20500/-, how much maximum amount can I take as loan even though I know its 25%, will I get 130000/- . Also as I understood repayment is for 36 months at 2% higher than current PPF rate which comes to 9.8% for the month of Aug 2017. Thus what will be my EMI and is it fixed or can I make prepayment for same. Kindly help me with this issue ASAP. I know I am not yet eligible for Part Withdrawl thus asking for loan option on PPF.

    Reply
    • Vijay-If you know the maximum eligibility withdrawal, then why you asking me? As per above table, you are eligible for withdrawal. Regarding PPF repayment on advance, refer below lines.
      1) The principal amount has to be repaid within 36 months. The repayment can be made either in a lump sum or in two or more monthly installments within the prescribed period of 36 months.
      2)Once, the principal is fully repaid, you need to repay the interest in two monthly installments.
      3) If the loan is not repaid within 36 months, interest at 6% more than what subscribers receive on their deposits are charged.
      4) The interest on the outstanding loan which has not been paid before 36 months or paid partly will be debited from the subscriber’s account at the end of each financial year.

      Reply
      • Thanks for the reply, Actually SBI Haridevpur Kolkata Branch which is my Home Branch ( BR CODE:- 11530) confirmed that my eligibility as per system is 116000/-. That’s fine I was happy with same and submitted Form D to the branch along with hard copy of my PPF Passbook and application letter to Branch manager. Now the catch is this gentle men does not know what to do with Form D and how to process PPF loan as he has never before done it and was completely ignorant of this facility as per 1968 PPF act. He asked his peers and they knew just withdrawal option and today he called me stating currently this facility is not possible from every branch. How to take this crap ? Please guide me what to do with same I have already launched official complaint against this branch in customer care but I doubt anything will happen. Can you guide me how to help this ignorant branch manager with their internal back office formalities to complete this loan process ?

        Reply
        • Vijay-Why you be the scapegoat for their bad practices and illiterate? Either let them process or let them give in writing that this is not possible for them.

          Reply
          • Sir, I’m also facing the same problem. GARFA SBI branch manager, he don’t know the process.

            Reply
            • Dear Rajdeep,
              If he don’t know the process, then it is his fault. Hence, let him give in writing that he has no knowledge about the process.

              Reply
          • Pls suggest what should do.

            Reply
  11. I have a PPF account. At present in the 18th or 19th year.

    As I understand,
    (1) I can withdraw any amount without any limitation to previous balance(subject to available balance)
    (2) I can close the account at any time now without penalty (1% reduction of interest).
    Please confirm above

    Is the amount received from closure (18th year) or on maturity (after 20 yrs) non-taxable?
    If yes, under which head/section?
    How to show in ITR return?

    Rgds

    Reply
      • Thanks for the information pl.

        Regards

        Reply
    • As mentioned by you in your article “PPF withdrawal rules & options after 15 years maturity”:
      In option 2
      The best feature of this option is, there is no limit to withdraw the balance during this period. You are eligible to withdraw whatever the amount available in your account at any point of time without any restriction. The balance amount will continue to earn. However, this option can be exercised only once in a year.
      In option 3
      In this option, you will be allowed to withdraw 60% of the balance at the beginning of each extended period (block of five years) is permitted. It means, let us say the account matured on 1st April, 2016 and the available balance is Rs.1 Cr. Then, you are allowed to withdraw 60% of this Rs.1 Cr during the block period of 5 years

      However our good friends from SBI say that for all cases it will be 50% three years previous i.e if i want to withdraw today, i will get 50% of my balance on 31.03.2014 (nothing in writing, today I went to SBI to withdraw, they told me this).

      Can you please share the link(s) where these rules are uploaded so that i can give a copy of the same to our SBI friends.

      Rgds

      Reply
      • UP-Refer THIS PDF FILE and read lines “As per Rule 9 (3B), if the PPF account is continued after maturity for a further block period of 5 years, the subscriber is eligible to make partial withdrawals not exceeding one every year subject to the condition that the total of the withdrawals, during the 5 year block period, shall not exceed 60 per cent of the balance at his credit at the commencement of the said period.”.

        Reply
  12. I have started my PPF in Dec 2012. Can i partially withdraw

    Reply
    • Sanjeeb-Refer post properly. You can withdraw after the 6th FY closes (in your case it is completing in FY 2017-18).

      Reply
  13. Dear Basavaraj Tonagatti.

    I want to open my PPF ACCOUNT. i have many question for that.
    (1) can i deposit amount rs 1000 in 1st month rs.1500 in second month, 5000 in 3rd month, 2500 in 4th month,?
    (2)can i deposit amount through online payment facility.?
    (3)which month and date is best for opening new PPF account. Today is date 25-4-2017.
    (4) can i see online account balance and statement of my PPf account?

    Reply
    • Jatin-1) YES.
      2) Yes, but it depends on where is your PPF account.
      3) Best day and month to invest is always TODAY.
      4) Depends on where your PPF account is.

      Reply
      • thanx for your reply

        Reply
  14. My ppf account matured in Mar 2013. I extended it for 5 more years with deposit.Now I want funds for my sons post graduation.What is the procedure to close the account and get the funds before maturity,i.e. in may 2017?

    Reply
  15. I need to foreclose my PPF account. The same is in the extended phase of 5 years, out of which two years are still remaining. How can I close the same with no or negligible penalty. Will look forward to knowing.

    Thanks and will appreciate your response.

    KK Singh

    Reply
  16. My PPF account is currently under the extended 5 year term post the initial 15 years. This term will mature in March 2018 but I wish to close my account. How can I do this without penalty. Will look forward to knowing. Please mail me on [email protected]

    Thanks for your help in advance.

    Reply
    • KKS-There is no penalty for delayed closure. However, if you want to close it then better to give the closure applicable before March, 2018.

      Reply
  17. I noticed now only that I forgot to deposit any amount in the F.Y 2011- 2012 in my PPF A/c (started in 2009). Deposits are made for all other years upto 2015-2016. what should i do now?

    Reply
    • Jayasudha-How they accepted the deposit in a lapsed account? Strange. But anyhow if you are continuously depositing it now, then continue regularly.

      Reply
      • The PPf account is with SBT. what should i do for the broken period? what may be the status of the account now? is it lapsed?

        Reply
        • Jayasudha-You can’t do anything for that period. If they are accepting the deposit means it is ACTIVE.

          Reply
          • Thank you so much sir, for your response.

            Reply
  18. I want to ask that I had withdraw cash from my daughters acc since she is minor in DEC 2015 can I withdraw cash now because it is now may 2016 and is written once in year yi can take out is emergency that’s why i want to take out give me sm idea

    Reply
  19. Dear Sir,
    Greetings

    Excellent Post.

    I need to apply loan against my SBI PPF. Could you please clarify if I can take it from any branch or it is mandatory to take from the home branch (i.e. where I opened the ppf account).

    Reply
  20. My account is already matured on 1st April 2016. Now I am approaching bank to close my account on 11.04.02016. Will the bank pay me interest for 10 days? Whether Interest is paid on daily product basis or monthly products basis on PPF account/

    Reply
    • Joshi-They not pay the interest post 1st April. Interest will be calculated on monthly basis but payable on yearly compounding.

      Reply
      • Dear Sir, If I wish to close the account on 2nd May,2016, will they pay me one month’s interest ?

        Reply
  21. sir how many days to I withdrawal my EPF money
    kitne din mein pf k balance transfer hojata hai

    Reply
  22. Hi,
    I opened my PPF account with SBI in Feb 2011, can you tell me when I would be eligible for partial withdrawal.
    I am getting different answers from different people, some say that since account opening financial year was 2010-2011 I would be eligible in April 2016, other say it would be April 2017.

    Please suggest.

    Thanks a lot.

    Reply
    • Prabhakar-The FY for Feb 2011 is 2010-11. So you will be eligible for partial withdrawal from FY 2016-17 i.e. from April 2016.

      Reply
  23. Hello Sir. Can U solve my problem for taking loan in PPF?
    Actually I opened this account on 02/09/2008 at Chattisgarh. And then I transferred this account to West Bengal on 13/07/2010.
    AFter transferring this account the bank staff wrote on front page that this account is opened on 13/07/2010 with a new account number. What about my investment & opening year 2008?

    Can I get loan from my account now? I was opened annually by 60000 rs. in first financial year i.e. 2008-09.

    Reply
  24. Greetings !
    Thank you for the information
    I want to know if i open a PPF account in the name of my child and i being the gaurdian can i apply for loan against PPF account incase if i need one.

    Reply
  25. my husband work in a office somebody suggested me to invest in ppf for tax benefits.but i didn understood that.he told to increse the amount of ppf in his salary to be deducted.but what if my husband leaves the job or compny fires him.tell me the no of years to invest, with amount.and rate of interest.per year

    Reply
    • Barkha-I think your pointing at your husband’s Employees Provident Fund but not Public Provident Fund (PPF). Am I right?

      Reply
  26. Sir if 13 instalments are paid instead of 12 what problem may i face in tax declaration i have already mentioned the total amount pl give me knowledge

    Reply
    • Maity-Usually banks not allow 13 installments. Also if you are investing less than what you declared with your employer then no issue. You show the amount what you invested. They deduct TDS based on the new taxable income.

      Reply
  27. Dear Sir,

    Excellent post, Enlightening and well thought of by you. Would you kindly let me know how much can I earn at the end of say 20-25 years by investing 1 lac.p.a in PPF considering maximum inflation of current times

    Regards
    Vishwanathan T G

    Reply
  28. My PPF will mature on March 31, 2015. Can I withdraw Rs.1,50,000 and then redeposit the same so as to get maximum tax benefit under 80cc for this year ?

    Reply
    • Sunil-If you are eligible to withdraw the amount as per above calculation then you can do so and there is no harm in it.

      Reply
  29. Hi Basavaraj,

    I want to know the difference between opening a PPF a/c in a post office and a bank…

    Thanks.

    Reply
    • Lowrence-No difference, all of them are just mediator between Govt and you.

      Reply
  30. Hi Basu,

    I would like to open a PPF account with ICICI bank with a contribution of 36000 or 48000 a year. Please let me know whether 3000/4000 per month for 12 months is better or a single payment of 36000/48000 is better. Will there be any difference(even slight) in the interest accrued between these two methods?

    If single payment is better, when should it be paid? Can i open it now?or wait for the next financial year? Excuse me if i had asked too many questions 🙂

    Thanks

    Reply
    • Sai-Better to open now itself (saving and investment must be NOW but not in any future date). If you are planning to invest monthly then invest within 1st to 5th of every month. If you are planning to invest lumpsum then within 1st to 5th of April.

      Reply
  31. dear sir, I have PPF A/C in state bank of india since last 14 years.Two years back I had withdrawn Rs 170000 from my account.It was not loan account.Can i deposit the withdraw amount again in PPF along with existing yearly deposit Rs100000 ?

    Reply
    • Pradhan-If it is not loan but withdrawal then you can’t do so.

      Reply
  32. I have completed 15 years of my PPF a/c on 31/03/2014 with a balance of 7,75,000/-. If I opt for continuing the same for further period of 5 years with subscription continue. Can I withdraw the 60% due in the years to come. If I opt for the not to subscribe the fund option then how much can be withdrawn in the next year. Please give your valuable advise.

    Baljinder Singh

    Reply
    • Baljinder-1) Extension with contribution-Yes you can do so within that block of 5 years but once in a year.
      2) Extension without contribution-Yes you can withdraw the unlimited amount but once in a year. The rest amount will earn the interest as usual.

      Reply
  33. My PPF a/c is 19+yrs old and the 1st ext. of 5 yrs will expire on 31.3.14. I need to know the following:
    1. can I withdraw 90%+ of my funds and continue with the balance in the same a/c?
    2. Is there a tax implication after crossing a limit of withdrawal?
    3 If I further extend for 5 yrs, can I withdraw the total value accumulated in my a/c upto the 20th year, any time after the 21st yr?
    4. My maturity value after 31.3.14 will be approx 20+lakhs. Could you please advise, * as to how could this money be re-invested getting all the advantages of PPF i.e tax,int rate + 100% liquidity whenever needed(which PPF does not provide).

    Regards, Biswas

    Reply
    • Arghya-
      1) Whether this extension is with contribution or without contribution? If it is with contribution extension, then you can withdraw up to 60% of the balance to your credit at the commencement of each extended period in one or more instalment, but only one per year. If the account is without contribution extension then any amount can be withdrawn without restrictions. However, only one withdrawal is allowed per year. The balance will continue to earn interest till it is completely withdrawn.

      2) No, there is no limit of taxation as withdrawal of any amount available from your PPF account is tax free.

      3) I think my answer to point one is answerable to this doubt.

      4) Let me know your timeframe, requirement from this fund and current status of investment please.

      Reply
    • If i open PPF account in Oct 2012, should i invest maximum amount 1Lakh before Apr 2013 or Sep 2013?

      Reply
        • ok.. till now i invested 61K.. i want to invest 39K now.. is it benefit or should i wait and invest 1st april to 5th april

          Reply
          • Suneel-It is best to wait till 1st April then invest between 1st to 5th of April. But do remember that Rs.39,000 will be considered for your next FY investment but not this year. I am advising you to invest after 1st April, because even if you invest today, that invested amount will not fetch any interest. Hence I said so. But if your motto is to fulfill the maximum limit within FY then you need to invest within 31st March.

            Reply
            • Thanks.. This is very good website.. If you are ok.. i will suggest to my friends

              Reply
              • Suneel-Pleasure and you are free to share the idea and about this site 🙂

                Reply
  34. I am aged 64 and I am working as Part time consultant. I am having a PPF Account since 1982 and so far I have neither take a loan nor withdraw. Can I eligible for a loan amount and my Balance is more than 30 lakhs. Is there any age criterial for a loan. If loan is not applicable can I withdraw some amount and keep the account running

    Reply
    • Neelakantan-Sir, there is no age limit to take a loan or withdrawal from PPF. You are eligible for a loan and withdrawal also based on the conditions mentioned above.

      Reply
  35. Excellent tutorial on PPF. I have read somewhere that if the PPF account, on maturity after 15 years, can be extended by 5 year blocks and investor can withdraw upto 60% of the balance at the commencement the extended block. If an account was opened on 5.12.1998, the 15year period ends on 5.12.2013, but closure is permitted on or after 1.4.2014. However, if it is extended by another 5 years, when can I avail the withdrawal upto 60% of the previous balance — whether from 6.12.2013 or after 1.4.2014? Also, please clarify whether any deposit is required during the FY 2013-14, because I have contributed in all the 15 financial years from 1998-99 till 2012-13.

    Reply
    • Muthukrishnan-Thanks. Withdrawal will be after 1st April 2014 but not from 6th Dec 2013. You can contribute till 5th Dec 2013.

      Reply
  36. I READ YR ARTICLE PPF -LOAN & WITHDRAWAL. I HAVE CREDIT BALANCE OF RS. 33 LAKH IN MY PPF A/C. WITH CENTRAL BANK OF INDIA , MUMBAI. IT IS VERY OLD ACCOUNT RENEWED EVERY 5 YEARS. TILL DATE NO WITHDRAWAL.

    NOW I WISH TO AVAIL LOAN AND APPROACH BANK MANAGER FOR LOAN ON MY PPF ACCOUNT. MANAGER SAYS THEY DO NOT PROVIDE LOAN ON PPF ACCOUNT. I REQUESTED TO GIVE ME INFORMATION THAT WHICH INSTITUTION WILL PROVIDE LOAN TO ME AGAINST MY PPF CREDIT BALANCE FOR 1 YEAR OR TWO. MANAGER DID NOT KNOW.

    I WISH YOU CAN GUIDE ME WHERE AND WHOM TO APPROACH FOR PPF LOAN. [email protected] 24 Nov, 2013

    Reply
    • Rohit-You can avail on from your PPF account. But others will hesitate to give you a loan on PPF. Reason for this is, PPF can not be attached to any of your loan or liability. Hence no one will give you a loan on the surety of PPF account.

      Reply
      • THANKS FOR YOUR RESPONSE. I WISH TO KNOW LEGAL POSITION AS FAR AS MY RIGHT TO AVAIL LOAN UNDER PPF ACT, CAN I APPROACH DIRECTLY TO AUTHORITY UNDER PPF ACT AND ASK FOR LOAN ? IF THERE IS PROVISION UNDER LAW TO PROVIDE HOW GOVT. INSTITUTIONS CAN REFUSE ? WHICH FORUM I CAN APPROACH TO CLAIM MY RIGHT TO AVAIL LOAN SINCE IT IS NOT WISE TO WITHDRAW FROM PPF A/C.DUE TO INCOME TAX BENEFITS.

        Reply
  37. My PPF account matured in October I have got the money transferred to savings a/c.
    Where do I show this receipt in my ITR ?

    Reply
    • Narinder-PPF is tax exempt as per current law. I think you can show it under the head of “Income from Other Source” and claim the exemption on the same.

      Reply
  38. I transferred PPF account from one SBI to another after 5 years. During transfer the old bank took my passbook, the new bank did not note the date of original account opening. I have done 15 years as per my calculations but the bank is taking account start when it was transferred. I dont even have old passbook to prove its opening date. Please advise on PPF authority (is it same as EPFO) where I can escalate this matter?

    Reply
    • Jains-Ask your previous banker to provide details. If they don’t budge to your request then the option left out is to inform them that you are going to file RTI. Please let me know how they react also.

      Reply
      • after interacting with SBI manager, they dug out all the records, updated that PPF account was eligible for closure (accounting for 15 years from original opening), issued a banker’s check — all of this in 30 minutes. Excellent experience for a change!!

        Will definitely open a new PPF account in next financial year

        Reply
  39. Hi Mr.Basu,

    Thanks for an enlightening post!! Appreciate your efforts for decoding the PPF jargon!!! I have a query, can you please address it for me.
    I opened a PPF account with Post office in the year 2010, now I am moving to the US and settling their permanently. Is it possible for me to with draw the amount or close the account per se?

    Reply
    • Madhavi-Thanks for your kind words. No you can’t close the account. Instead my suggestion will be to continue till maturity. Because once you close this account then you can’t open new account under your new residential status of NRI. Hence I suggest you to continue.

      Reply
      • Thank you so much Mr.Basu…just to add to the query…so currently my account is deactivated for the past year…can I just keep it deactivated for the next 13 years..finally pay the penalty amount the minimum balance requirement and then collect my money at maturity?..apologies if it sounds like a foolish plan but please indulge me!!!

        Reply
        • Madhavi-Yes you can do so if at all you don’t want to continue your PPF account further. But in my view it is best debt product. So better to continue. But I am not sure your complications. So take your own decision considering the other options.

          Reply
  40. Thanks it is very useful to me

    Reply
  41. I have a PPF A/C maintained in a SBI Branch. Due to the change of my loacatio to some other place, can I deposit my money in different location of the SBI Branch.

    Can I open another A/C in my wife’s name.

    Reply
    • Panda-That you need to ask with SBI branch. I think they facilitate this deposit. Yes you can open one more account in your wife’s name also.

      Reply
  42. Thanks.It is vary useful information.Can u please give example of interest calculation?

    Reply

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