PPF is most favorite investment option with risk-averse investors in India as PPF scores high on safety, tax benefits and loan options.
The entire PPF corpus amount could be withdrawn only on maturity. However, you can take loan against your PPF amount between third and sixth year of opening the PPF account. As this loan is against your PF balance you don’t need to mortgage anything.
Simple steps to take Loan from PPF
1. Form D needs to be submitted to avail loan against your PPF account
2. Your PPF account number and amount of loan applied for, are needs to be stated.
3. Also, you need to mention the details of your previous loans, if any.
4. Need to enclose a copy of your PPF passbook.
5. The Form D needs to be submitted to your PPF bank / post office with all these important details
6. Once it is verified, the PPF loan will be granted with a week.
Important things to remember:
1. Usually, the PPF interest rate is only 2% more than the interest rate that you get for your PPF account.
2. One can avail loan amount of upto a maximum of 25% of the PPF balance amount at the end preceding the year in which the loan is applied for.
3. PPF subscriber can take second loan after full loan payment of first loan. But he/she can take only one loan in a year, even if the previous loan is paid.
4. No loan can be given from the seventh year of PPF opening but you can apply for partial withdrawal from your PPF account.
5. In case, the loan is from minor’s PPF Account, the guardian has to make a written declaration that the PPF loan is required for the benefit of that minor.
6. Inactive accounts or discontinued accounts are not eligible for PPF loan.
7. The principal amount of the PPF loan should be paid within 36 months and after that the interest should be paid not more than 2 monthly installments.
Important links for PPF loan
1. SBI PPF customers can download Form D from here
2. Post office PPF customers can download Form D from here
3. ICICI PPF customers can download Form D from here
4. Canara Bank PPF customers can download Form D from here
5. Bank of India PPF customers can download Form D from here
6. Dena Bank PPF customers can download Form D from here