New Delhi: Small Savings Schemes are one of the best options that helps you in times of crisis. If you wisely invest or make disciplined savings, they are also great options to bail you out via their loan facility.
One such Small Savings Scheme is Public Provident Fund (PPF), which other than being a long-term savings option, also allows you to take loan in case of an emergency.
Here are some important conditions for availing Loan facility on PPF account
Loan can be taken after the expiry of one year from the end of the financial year in which the initial subscription was made.
For example you opened a PPF Account during 2020-21, so you can take loan in 2022-23.
Loan options can availed before expiry of five years from the end of the year in which the initial subscription was made.
You will be allowed to take loan up to 25% of balance to your credit at the end of the second year immediately preceding the year in which loan is applied.
So if you take loan during 2022-23, 25% of balance credit on 31.03.2021, will be allowed
You can take only one loan in a Financial Year.
Second loan shall not be provided till first loan is being not repaid.
If loan is repaid within 36 month of the loan taken, loan interest rate @ 1 percent per annum shall be applicable.
If loan is repaid after 36 month of the loan taken loan interest rate @ 6 percent per annum shall be applicable from the date of loan disbursement.
PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal.
The PPF Scheme, introduced by the National Savings Organization in 1968 was aimed at making small savings a lucrative investment option.
PPF currently offers an interest rate of 7.1 per cent.
A minimum of Rs 500 and a maximum of Rs 1.5 lakh per annum can be deposited every year in a PPF account at present. Deposits can be done maximum in 12 transactions. However, you must note that if you deposit more than Rs1.5 lakh in your PPF account per annum, the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act.