How to get loans against a PPF (Public Provident Fund)

A Public Provident Fund (PPF) is a fixed investment scheme that allows an employed individual to earn a certain amount of money after a fixed period. PPF is quite a popular investment scheme and can be really beneficial for you in the long term. Now, you can also get a loan on the basis of your Public Provident Fund (PPF) account. If you are looking to get a loan, but do not wish to offer any collateral in exchange, then you can get one on the basis of your PPF account.

Want to learn more about how you can get your next loan using your PPF account? Here’s everything that you need to know about.

How to get a personal loan against PPF?

When you invest in a PPF account, you cannot withdraw the sum immediately if you need it. Instead, it will take up to 6 years until you can get the amount back. Therefore, if there is any emergency, you can only take a loan against public provident fund. 

To get your PPF loan, you will first have to approach your nearest post office and collect Form D. Next, you (if you are the PPF account holder) will have to fill up the details on the form and then submit it back at the post office where the account is held. 

While you are filling out the form, you will have to provide details such as the PPF account number, the loan amount, a copy of the passbook and a statement saying that you will repay the full amount of the PPF loan within a span of 3 years.

Read more: Top 7 benefits of a personal loan that you should know

What are the benefits of getting a personal loan on a PPF account?

Here are some of the biggest benefits when you apply for a personal loan on PPF account:

• The loan applicant will not have to offer any asset as collateral – the PPF funds are the collaterals themselves
• You will have a time period of 3 years or 36 months to pay off the loan, which is sufficient for most people
• The PPF loan interest rate is extremely low 
• You can choose to pay the interest on your loan amount within 1 or 2 instalments

How to apply for a personal loan from a PPF account?

Here are the steps that you need to follow to apply for your personal loan from your PPF account:

• Ensure that you have a PPF account already
• Calculate the loan amount to borrow – you can only borrow up to 25% of your PPF amount
• Fill out Form D – you can get it at any post office or use the apply PPF loan online option if available.
• Enter the details as required
• Submit your application
• Await loan application approval

Read more: Learn all about the minimum salary needed to get a personal loan

What are the eligibility criteria for an online loan on PPF?

Any person who is holding a PPF account is eligible for a loan on PPF account. However, you should remember that a PPF loan eligibility facility is only available to account holders who are between their 3rd and 5th year of account opening. PPF loans are short-term loans (3 years) and hence they must be paid back within that time span.

Important things to remember after taking a loan against your PPF account

When taking out a public provident fund loan, keep these essential PPF loan rules in mind:

• Interest payments must be made after the principal is fully repaid.
• Any unpaid interest will be deducted from your PPF account balance.
• You can apply for another PPF loan only after clearing the first one.
• Your PPF account will not generate income until the loan is repaid in full.

Read more: How to get personal loans for self-employed in India?

Should you take a loan against your PPF account?

A loan against PPF account is a practical option due to its low-interest rate and lack of collateral requirements. The process is straightforward, and it provides immediate access to funds. However, if you need more loan options, consider applying for a personal loan through Airtel Flexi Credit, which offers competitive loan against PPF interest rate  flexible repayment, and instant approval.

FAQs 

1. How to apply for a PPF loan online?

To apply for a PPF loan online, ensure that you have an active PPF account. Some banks and financial institutions may offer an online application process, where you can access and submit Form D digitally. Check with your bank’s online banking portal for the availability of this feature. If online services aren’t available, visit your nearest post office to complete the application manually.

2. How to take a loan against PPF?

To take a loan against PPF, you must visit your nearest post office or bank and collect Form D. Fill in the details such as your PPF account number, the loan amount, and attach the required documents (such as your passbook). Submit the completed form at the post office or bank, and ensure that you agree to repay the loan within three years. Approval will follow once the application is reviewed.

3. How much loan can we take from a PPF account?

You can take a loan from your PPF account of up to 25% of the balance available in your account at the end of the second year preceding the loan application year. This percentage ensures that you have a manageable loan amount without depleting your account balance significantly.

4. How to apply for a PPF loan online?

To apply for a PPF loan online, check whether your bank offers online services for PPF loans. If available, log into your online banking portal, access the PPF loan section, and submit the required details via Form D. If your bank does not offer this service, you will need to apply manually at the post office or branch.

5. How to apply PPF loan online?

To apply PPF loan online, you need to first confirm whether your bank offers an online application process for PPF loans. If it does, you can log into your bank’s website, fill in the necessary details through Form D, and submit your application electronically. If not, you may need to visit the post office to apply manually.

6. What all things I should to remember after taking a Loan against my PPF account?

After taking a loan against PPF, keep these key points in mind:

• Repay the principal first, then the interest within the given time frame.
• Any unpaid interest will be deducted from your PPF account.
• You can only apply for a second loan after repaying the first loan entirely.
• Your PPF account will not generate income until the loan is fully repaid.