Public Provident Fund loan rules: Here's what you can get with Rs 1.5 lakh PPF account in third, sixth year - Check calculation

Public Provident Fund (PPF) account allows you to apply for a loan at any time after two years from the end of the year in which the initial subscription was made. You can apply for a loan amount not exceeding above 25% of the amount present in your account at the end of the second year immediately preceding the year in which you apply for the loan. The loan taken under the PPF scheme needs to be repaid either in one lump sum or in monthly instalments up to a maximum period of 36 months. After the principal amount of the loan is fully repaid, you will have to pay the interest on the loan amount in two equal monthly instalments at the rate of 2% (over the prevailing rate) per annum calculated for the loan period. 

Here's what the official Public Provident Fund Scheme 1968 says about PPF loan and repayment

Public Provident Fund Scheme 1968 says, "... any time after the expiry of one year from the end of the year in which the initial subscription was made but before expiry of five years from the end of the year in which the initial subscription was made, a subscriber may, if he so desires, apply in Form D or as near thereto as possible, together with his passbook to the Accounts Office for obtaining a loan consisting of a sum of whole rupees not exceeding twenty five per cent of amount that stood to his credit at the end of the second year immediately preceding the year in which the loan is applied for."

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No fresh loan: The rules say, "A subscriber shall not be entitled to get a fresh loan so long as earlier loan has not been repaid in full together with interest thereon."

Repayment of loan and interest. The rules say, "The principal amount of a loan under this Scheme shall be repaid by the subscriber before the expiry of thirty-six months from the first day of the month following the month in which the loan is sanctioned. The repayment may be made either in one lump sum or in two or more monthly instalments within the prescribed period of thirty-six months. The repayment will be credited to the subscriber’s account."

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"After the principal of the loan is fully repaid, the subscriber shall pay interest thereon in not more than two monthly installments at the rate of two per cent per annum of the principal for the period commencing from the first day of the month following the month in which the loan is drawn up to the last day of the month in which the last instalment of the loan is repaid."      

PPF calculation chart at 8% interest, Rs 1.5 lakh/year investment

In case where the loan is not or is repaid only in part within the prescribed period of thirty-six months, interest on the amount of loan outstanding is charged at six per cent per annum instead of at one per cent per annum from the first day of the month following the month in which the loan was obtained to the last day of the month in which the loan is finally repaid. 

PPF loan calculation: How much loan you can get on Rs 1.5 lakh PPF account

Suppose, you started investing Rs 1.5 lakh in the PPF at the start of FY 2019-20. You can seek the first loan after two years of the end of the financial year, i.e in 2022 (or, FY 2021-22). The loan available to you will be 25% of the balance at the end of 31st March 2020. This will be 25% of Rs 1,62,000 = Rs 40,500.  

Suppose you apply for a loan in the sixth year, you would be eligible for a loan of 25% of Rs 7,29,990 (see chart). This will be approx Rs 1,82,497.