Know about loan facility on your PPF; see benefits, terms and conditions here!

If you are an investor in the Public Provident Fund (PPF) scheme, then this investment can be of great use to you in your times of need. Want to know how? The investors in this small savings scheme (SSS) can avail loan on their PPF deposits. You are not required to mortgage anything in lieu of the loan extended to you. The interest rate is reasonable, and the amount taken as loan can be easily repaid.    

This facility can be availed from the third financial year of the opening of the account and before the completion of the sixth years. You are entitled for a loan which is 25 per cent of the total amount that is deposited in your PPF account.  

Remember this important detail:   

If the account is opened in the name of a minor or a mentally unsound person, the loan can be taken by the guardian of the account holder. The guardian needs to submit a certificate in the account office.  

Loan available only once in a year: 

The PPF account holder can apply for loan only once in a year. Any other loan can be availed off only after the repayment of loan along with the interest.   

Loan repayment and interest rate: 

The entire loan amount taken by the PPF account holder can be returned via a one-time payment facility. After the payment of principle amount, the account holder is required to repay pay the interest in two installment at an interest rate of 1 per cent on the principle amount.  

If the entire loan repayment is not completed in 36 months, then the account holder will be required to pay the remaining part of the loan at 6 per cent rate of interest. This interest rate will be charged from the first day of the month from when the loan was taken till the last day of the month when the last instalment was paid. This means that in the event of non-payment of loan within the 36-month deadline, the rate of interest on the remaining loan will increase from 1 per cent to 6 per cent.    

Amount to be deducted every year from the account: If the interest on remaining loan is not paid before the completion of 36 months, then this money will be deducted from the account of the PPF account holder. In the event of the passing away of the accountholder, the nominee will be required to repay the loan.