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.

Eligibility

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
   

Transactions

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.
   

Duration

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
   Baroda
   
4. Bank of India
   
5. Bank of Maharashtra
   
6. Canara Bank
   
7. Central Bank of
   India
   
8. Corporation Bank
   
9. Dena Bank
   
10. Indian Bank
    
11. Indian Overseas
    Bank
    
12. Punjab National Bank
    
13. Syndicate Bank
    
14. UCO Bank
    
15. Union Bank of
    India
    
16. United Bank of India
    
17. Vijaya Bank
    
    
18. ICICI Bank Ltd
    

Returns

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.

Loans

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 http://desimoney.blogspot.com