PPF (Public Provident Fund) is a secure long-term investment option. The scheme is implemented by the Government of India. Indian citizens can open the account in a post office or designated bank branch. The scheme promotes small savings and offers income tax exemptions on the investment. With a 15-year investment period and an option to extend the term in multiple 5-year blocks, the scheme is fairly customizable. Employees as well as people working in the unorganized sector, benefit from the scheme.
The PPF account can be opened online or offline. Most banks and post offices offer the offline account opening facility. However, even if you create an offline account, the account can be managed online as well. ICICI Bank offers a completely online account opening process. It is the first bank in India to offer 100% online account creation. Customers who have a savings account and net banking facility with ICICI Bank will be able to access their ppf account online.
On the other hand, SBI, Axis Bank and other banks are offering a semi-automatic account opening process. You can register your details online for opening an account. However, the application processing will be incomplete, unless you visit the branch. You can submit the downloaded form along with documentary evidence and photograph at the branch to open the account.
Requirements to open an online account
To open a ppf account online, you should have access to the following information:
If you have the above information and the OTP on your mobile phone, the account creation will be seamless. ICICI Bank has access to authenticate your information with the UIDAI website. The information will be verified and processed immediately.
After creating the account, the PPF account will be linked to the savings account.
There are several ways to contribute to the PPF account. You can deposit money into your account by using the pay-in-slip provided at the bank or post office. It is a completely offline process. The payment status will be updated immediately as all the computers used at the bank are inter-connected.
You can deposit the money into your public provident account by cheque, DD and online transfer, in addition to cash deposits. If you set the automatic deduction from your account, the money will be deducted from your account and it will be credited to your PPF account instantly. You can set the amount and date. The transfer will take place automatically. If you choose the automatic transfer option, you can effortlessly manage your savings.
The loan facility is available from the 3rd year of investment. You can check the eligibility criteria for a loan by accessing your account online. The interest on the loan will be 2% higher than the interest paid on the PPF deposits. You can pay the interest as well as the loan at regular intervals. After the closure of the current loan on PPF deposits, you can apply for another loan.
As the interest rate on the loan is low, the loan will not be a financial burden. You can take a loan from the 3rd year to the 6th year of investment. From the 7th year, no loan facility will be extended. However, you will be eligible for partial withdrawals from the 7th financial year.
Partial withdrawals are allowed from the 7th financial year. If you open the account in February 2009, it will come under the FY 2008-09. If the account was opened on 1st April 2010, the partial withdrawals are allowed from 1st April 2015.
PPF account online facility will help you find out your withdrawal limits. Once you log in to your online banking account, you can find the particulars of your savings account, loan account and PPF account. If you are eligible for the withdrawal option, you can apply online.
The online banking facility will ease your task to some extent. The appropriate form can be downloaded and submitted at the bank branch. It will help the bank branch to process your application quickly and the amount can be withdrawn.
The maximum amount that you can withdraw from the PPF account is less than 50% of the previous financial year’s balance. The money can be used to meet any emergency financial needs.
The PPF account balance can be found online. The interest on the PPF deposits will be credited at the end of the financial year (on 31st March). The contribution made towards a PPF account can as per your needs. The maximum amount that you can deposit in the account is Rs. 1.5 lakh per annum. The minimum amount that you should deposit is Rs. 500. If the minimum amount is not paid in a financial year, you will have to pay the penalty.
To get the best returns on your PPF account, you must deposit your savings before the 5th of every month. The interest will be calculated on a monthly basis and credited on an annual basis. If you make a single deposit of Rs. 1.5 lakh per annum, it should be done before 5th of April. Doing this will ensure that the deposit earns an interest for the entire financial year. If you make deposits in installments, the deposits can be made before the 5th of every month. If you have set an automatic deduction from your savings account to credit the amount into a PPF account, you can set the deduction before the 5th of every month. Thus, you will not only be contributing money regularly, but a corpus for an annuity policy will easily be built.
The PPF account can be created online. You can use the net banking facility of ICICI, SBI, Axis Bank and other banks to create the PPF online account. Most banks stipulate that an individual must have a savings account before opening a PPF account. You can register a nominee while opening the account, which can be changed later.
ICICI Bank allows its customers to create a new PPF account without visiting the branch. With SBI, Axis and other banks, you will need to visit the branch after printing the online form. In the coming days, banks are likely to offer many other online facilities.
Transfer of PPF account
If you open a PPF account with a post office, you can transfer the account to a bank. As online operations are not available with accounts opened at the post office, you can transfer the account to a bank which offers online facilities.
If you are transferred to a remote village where PPF facility is not available with a bank, you can transfer the existing PPF account with the bank to the post office. Thus, there are multiple options provided to PPF accounts for the convenience of account holders.
The PPF account online access will let you download statements, as per your convenience. You can download a statement as per the financial year so that the statement can be submitted to your employer very easily. The account status, loan eligibility, loan account status, eligibility for withdrawal and withdrawal limits can be tracked online.
The public provident fund account is meant to fulfill your long-term financial needs. The account offers the highest level of security. It is backed by the Government of India, thus there is no chance that you will lose the money. The interest earned on the account is exempted from the income tax. The maturity proceeds after the term are exempted from income tax.
As there will be limited liquidity through loans and partial withdrawals, you can manage PPF account even if you maintain other kinds of long-term investment options such as EPF and retirement plans. The amount that you have with the PPF account cannot be attached to a court order. Except for the liability from the income tax department, the amount cannot be dispersed for any other liability. The money saved under the fund is secure and it will be paid to the nominee in the event of the death of the account holder.
Extension of the account
The PPF account can be extended after the completion of 15 years. It can be extended in 5-year blocks after the completion of the 15-year block. You should submit a request to the bank or post office to request the extension. If the extension request is not made to the bank or post office within one year, the extension will be done automatically. The amount in your account will earn the interest. However, you will not be able to withdraw more than 50% of the account when the account has been extended automatically. You can withdraw 100% after submitting the extending request manually.
With the PPF account online facility, you can access your account information and request for loans and withdrawals can be submitted online. There is great flexibility in maintaining the online account. Thus, it’s time that you made the most of your PPF account and enjoyed its online facilities.
Helpful Resources: Income Tax Computation