Monday, September 15, 2008

Public provident fund in India - the rules of the game

I have been on and off asked questions about PPF account and all the details behind it. Here are a quick summary of the rules for Public Provident fund (PPF) in India - hope this helps you folks out.

  1. Non Resident Indians are not eligible to open an account under the Public Provident Fund Scheme.
  2. If a resident who subsequently becomes Non Resident Indian during the currency of the maturity period prescribed under Public Provident fund Scheme, may continue to subscribe to the Fund till its maturity on a Non Repatriation Basis
  3. Minimum amount that should be deposited in a year is Rs 500
  4. You can’t transfer money from your EPF account to your PPF account
  1. Investment per year should range between Rs. 500 and not more than Rs. 70,000 in a year.
  2. You cannot do more than 12 transactions in a year in a PPF account.
  3. You can transfer the account from one "office" to another "office" (never tried this one. Can someone let me know their experiences here?)
  4. If you don't pay the minimum Rs. 500 in a given year, you will have to reinstate the account for a fees of Rs. 50.
  1. The account should be held for 15 years.
  2. Any time after the expiry of 15 years, you can extend the account for another 5 more years, to a total of 20 years maximum.
Opening an account

According to the RBI website, the list is given below. Obviously your luck will be in the fate of the employee who is going to deal with you when you walk in to one of these banks :).

  1. State Bank of India and its Associates
  2. Allahabad Bank
  3. Bank of
  4. Bank of India
  5. Bank of Maharashtra
  6. Canara Bank
  7. Central Bank of
  8. Corporation Bank
  9. Dena Bank
  10. Indian Bank
  11. Indian Overseas
  12. Punjab National Bank
  13. Syndicate Bank
  14. UCO Bank
  15. Union Bank of
  16. United Bank of India
  17. Vijaya Bank

  18. ICICI Bank Ltd
  1. Currently the interest is 8% tax free. This would equate to 12% roughly on the highest tax bracket.
  2. Interest is credited on the lowest balance on the account on the 5th of each month. It makes sense to deposit the whole Rs. 70,000 on or before April 5th of
    each year so that your money earns interest over the full year.
  1. You can avail a loan anytime after one year after opening the account and upto five years from the year of opening the account. The loan amount cannot be greater than twenty five percent of the balance on the account at the end of the second year immediately preceding the year in which the loan is applied
  2. After 5 years, you can withdraw upto 50% from the balance in the account at the end of the 4th year.

This post was created by Vivek on


Sandeep Gupta said...

This was a very useful post, thank you!
I was wondering if you could advise on whether I, as an NRI, can extend my PPF account for a further block of 5 years or not? Also, upon final maturity, when I withdraw the accumulated monies, how would the bank know whether I am an NRI or a resident?
Any help / information on this would be appreciated.
Kind regards

sharnjit ahluwalia said...

Very helpful information, thanks. I opened my PPF account in sbi jalandhar sometime in 1999-2000. I moved to UK in 2002. After three years I bought property in Pune and on my request to sbi Jalandhar my account was transferred to sbi Pune, no prolems. I was issued a oass book in which my son depisits the money periodically on my advice.