What is PPF (Public Provident Fund) – Features & Interest Rate in 2022?

What is PPF

PPF is the short form for the term “Public Provident Fund”. In India, it was launched in 1968. The purpose of its launch is to organised tiny savings as investments. Above all, investors can get returns as well. This is why Public Provident Fund is called a savings-cum-tax saving investment instrument. Apart from helping an individual to save on annual taxes, it can help with building a retirement corpus as well. Are you a person looking for a safe investment? Do you wish to save taxes and earn guaranteed returns? If your answers to these questions are affirmative, PPF Account is the answer for you.

What is a PPF (Public Provident Fund) Account?

Many banks offer the opportunity to create a Public Provident Fund account for customers. It is a popular long-term saving-cum-investment option in India. Banks and other financial institutions in India offer it. It is classified as this type of product because it helps with tax saving, getting returns and assuring safety as well to investors.

In India, the National Savings Institute of the Finance Ministry is the first body to offer a PPF account to the public. From there on, it has improved as an efficient tool for the creation of long-term wealth for investors. When you open a Public Provident Fund account in any bank, you will get it with a 15-year maturity period. Also, you will get the option to extend your investment after 15 years. For a small saver like you, PPF is undoubtedly, an attractive investment instrument. This is because of the tax benefits it offers and also the attractive interest rates.

Who is Eligible to Open a PPF (Public Provident Fund) Account?

If you are an Indian citizen, you are eligible to open a PPF account with any bank in India. You can open this account under Public Provident Fund Scheme and you can get tax-free returns from this account. 

Is non-resident Indians Eligible?

From August 2018, NRIs are not permitted to start a PPF account in India. However, if you have started an account before you turned an NRI, you can continue the existing account for up to 15 years. Once the maturity period reaches, you will have to withdraw and cannot extend.

What are the Key Features of PPF (Public Provident Fund)?

PPF stands unique from other savings instruments due to the following features:

Features of Public Provident Fund

  1. Loan against Public Provident Fund: If you own a PPF account, you can take a loan against the balance you have in this account. But, remember that you can take a loan only after the third year and before the 6th year of your account opening date. Let us consider that you are applying for a loan this year. In this case, you can take a loan equal to 25% of your PPF balance at the end of the previous year.
  2. Taxation Benefit: As a PPF account falls under the EEE category of tax policy, you can get the best tax benefits for this account. EEE means Exempt-Exempt-Exempt according to Indian tax policy. In other words, in the year of your investment, you can claim the amount you invest in PPF as a deduction under sec 80C. Further, the interest you earn from your Public Provident Fundaccount and even the amount you accumulate in this account is free of tax liability.
  3. The Least and the Utmost Investment: The least amount you can invest in your Public Provident Fund  account in any year is Rs.500. So, anybody can invest in this account. In the same way, the utmost amount you can invest in a year is Rs.1.5 lakh in this account. This is again beneficial for those, who are ready to invest this much money in their PPF account in a year to save tax.
  4. Interest Rate for PPF Investment: The government sets the interest rate for PPF. Also, the government pays this interest every quarter. At present, the interest rate applicable to the PPF account is 7.1%. Every month, the amount of interest you get will be calculated. For this, the lowest PPF balance in your PPF account after the 5th of every month until the last day of the money will be considered. Also, the interest will be credited to the Public Provident Fund account itself. The accumulated interest for each quarter is paid by the government at the end of every financial year to your Public Provident Fund account.
  5. Lock-in Period: As mentioned earlier, you will get back the money you invest in a Public Provident Fund account after 15 years. This is the lock-in period from the date of account opening. You can withdraw the money only on maturity. Also, you can extend this tenure to five more years. You can do this only after 15 years. What if you need the money prematurely? Premature withdrawal is permitted. However, you can avail of it only in the case of emergencies.

So, a Public Provident Fund account carries many benefits and features. It is a safe investment instrument. Of course, the interest rate is fixed at 7.1%. But, you can ensure the safety of your money in this account.


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