In India, one of the most important things that people look for in an investment scheme is the safety of their funds and valuable returns. The Public Provident Fund, better known by its acronym PPF exactly offers you this. One of the oldest investment tools in India, it continues to remain the most popular savings and investment schemes till date mainly because it guarantees returns and the returns are exempt from tax.

What is PPF?

PPF is a savings and investment scheme that was first offered by the National Savings Institute in 1968. In India, several investors use this as a reliable tool to build a retirement corpus by investing a small amount of their income over a long period. Typically, the PFF has a maturity tenure of 15 years. However, you can extend the investment period by five years. With its attractive rate of interest, PPF is one of the most preferred investment tools amongst small savers.

Important Features of PPF

Investment limit

You can open a PPF account with a minimum investment of Rs. 500 to a maximum of Rs. 150,000 in one financial year.

Investment period

The investment duration of PPF is 15 years, and you can withdraw the amount in lump sum along with interest earn on maturity. Your PPF account will expire after 15 years. However, you can open a new account after this period. Also, the PPF account gives the account holder the option to extend their account in a block of 5 years.

If you choose to continue to invest, you must submit Form H to the bank where you have the PPF account within one year after the PPF account has matured.

Interest rate

With effect from April 1st, 2019, as mandated by the government, the interest applicable on PPF account is 8%. Your PF account will continue to accrue the interest if you do not withdraw the amount even after maturity. And the best thing is, the interest earned is exempted from tax.

Transfer of PPF account

This is another significant benefit of holding a PPF account; you can transfer your PPF account any branch of a nationalized bank to any other branch or the post office and vice-versa. However, the account holder cannot transfer his/her account to another person. Also, the nominee cannot continue to hold the account in the event of the account holder’s demise.

Loan facility

As a PPF account holder, you get the benefit of applying for a loan against the account. However, you must know that you are eligible to apply for the loan only after three years of opening the account; you can avail a loan up to 25% of the funds in the account.

Learn more about your Pension Plans here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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