The Public Provident Fund (PPF) is a popular long-term investment scheme backed by the Government of India, aimed at providing financial security and attractive returns to the general public. This article outlines the essential features, eligibility criteria, account opening process, and other important aspects of the PPF scheme.

Key Features of the Public Provident Fund (PPF) Scheme

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Eligibility

1. Individual Accounts: Any individual can open a PPF account for themselves or on behalf of a minor of whom they are a guardian.

2. Non-Eligibility:

   • Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) cannot open new accounts under this scheme.

   • Joint accounts are not permitted.

3. Minors and Persons of Unsound Mind:

   • An individual can open a PPF account on behalf of each minor or person of unsound mind for whom they are the guardian.

   • Only one account per minor or person of unsound mind is allowed.

4. NRI Accounts:

   • Residents who become NRIs during the account's tenure can continue contributing until maturity but cannot extend the account post-maturity.

   • Accounts opened by NRIs before they attained NRI status must be closed after maturity, and contributions made post-maturity will not earn interest.

5. Cessation of Indian Citizenship: Accounts must be closed if the account holder or the guardian ceases to be an Indian citizen.

6. Old HUF Accounts: PPF accounts opened by HUFs before May 13, 2005, should be closed after the initial 15-year term.

Opening an Account

1. Application Process:

   • Fill out Form 1.

   • Submit a recent passport-size photograph

   • Submit proof of age for minors, a passport-size photograph of the guardian, a certificate from a mental hospital for persons of unsound mind, and the initial deposit with a pay-in slip.

2. Identity Verification:

   • Submit Aadhaar number and PAN or Form 60.

   • If not available at the time of opening, these must be provided within specific timeframes.

3. Special Cases:

   • Illiterate or visually challenged individuals must visit the branch personally for authentication and assistance.

Subscription Limits

1. Minimum and Maximum Deposits:

   • Minimum deposit: ₹500 per year.

   • Maximum deposit: ₹1,50,000 per year, inclusive of deposits in both individual and minor accounts.

Deposits and Withdrawals

1. Initial Deposit: Minimum ₹500 required to open the account.

2. Subsequent Deposits: Can be made in multiples of ₹50, either in a lump sum or in installments.

3. Duration: The account matures 15 years from the end of the financial year in which it was opened.

4. Partial Withdrawals:

   • Allowed after 5 years from the end of the year of account opening.

   • Maximum 50% of the balance at the end of the fourth year preceding the year of withdrawal or the end of the previous year, whichever is lower.

Loan Facility

1. Eligibility: Available from the third to the sixth financial year of account opening.

2. Loan Amount: Up to 25% of the balance at the end of the second year preceding the application year.

3. Repayment: The loan must be repaid within 36 months, with an interest rate of 1% per annum. If not repaid in time, the interest rate increases to 6% per annum.

Account Continuation and Closure

1. Post-Maturity Options:

   • Withdraw the entire balance.

   • Continue the account without further deposits, earning interest.

   • Extend the account in blocks of 5 years with or without deposits.

2. Premature Closure:

   • Allowed after 5 years for specific reasons such as life-threatening diseases, higher education, or change of residency status.

   • Premature closure incurs a penalty of 1% less interest than the rate applicable during the tenure.

Interest

1. Calculation: Interest is calculated monthly on the lowest balance between the 5th and the last day of the month.

2. Credit: Interest is credited at the end of the financial year.

Nomination

1. Nominees: Up to four nominees can be specified.

2. Minor Nominees: A guardian must be appointed to receive the balance on behalf of minor nominees.

3. Changes: Nominations can be modified anytime before account maturity.

Discontinuation and Revival

1. Discontinued Accounts: If the minimum annual deposit is not maintained, the account is discontinued but continues to earn interest.

2. Revival: Discontinued accounts can be revived by paying a fee of ₹50 and the minimum deposit for each lapsed year.

Death of Account Holder

1. Account Closure: The account is closed upon the death of the account holder, and the balance is paid to the nominee or legal heir.

2. Interest: The account earns interest until the end of the month preceding the month of payout.

Special Feature: Protection of credit balance from attachment

Amount standing to the credit of any account holder shall not be liable to attachment under any order or decree of any court in respect of any debt or liability incurred by the account holder.

The PPF scheme offers a safe and attractive investment option with benefits such as tax exemptions, long-term savings, and loan facilities. Whether you are planning for retirement, saving for your child's education, or building a financial cushion, the PPF scheme provides a reliable avenue to grow your wealth over time.