PPF Account: Investing in the Public Provident Fund is an excellent savings option. However, it is essential to be familiar with all its rules before investing. For instance, knowing the interest rate it offers and the minimum investment amount required to start investing.
You’ll receive the advantage of compounding interest on your investment. It’s vital to know which form is required to open it and the terms for obtaining a loan. The Small Savings Scheme is managed by the government.
This is a government-guaranteed investment. Therefore, there is no risk involved, and the interest rate is reviewed quarterly. The government also makes changes to the rules associated with it from time to time. Let’s find out what the new rules for PPF are…
Form-1 for opening a PPF account
To initiate a PPF account, you’ll need to submit Form-E instead of Form-1. To extend the PPF account after 15 years (including deposits), the submission of Form-H is required one year prior to maturity instead of Form-4.
How much loan will be available on PPF?
To apply for a loan against your PPF account, you can borrow up to 25% of the balance available in the account two years before the application date. In simple terms, if you applied for a loan on March 31, 2022, and had Rs. 1 lakh in your PPF account two years earlier (on March 31, 2020), you could borrow 25% of this amount, which is Rs. 25,000.
PPF: What will be the loan interest rate?
Taking a loan against the balance in your PPF account now incurs a reduced interest rate of 1%, down from the previous 2%. Following repayment of the loan principal, interest will be payable in more than two installments. Interest calculation commences from the first day of each month.
