Public Provident Fund or PPF is one of the highest interest paying savings schemes supported by the government. It is considered a safe investment option, which guarantees stable and attractive returns after retirement.
An investor can start investing in it with a minimum of 500 rupees. If investors keep investing in it regularly, they can accumulate a good amount of money in a few years.
But do you know that you can also take a loan from PPF account if needed. These loans are available at very low interest rates and do not require much effort. Learn all the benefits of taking a loan from PPF account here.
No need to pledge anything
Generally, when you apply for a loan, you have to pledge gold or property, but if you take a loan against PPF there is no need to pledge anything. Also no proof of your earnings is asked. You can get it very easily like a personal loan. You get this loan based on the amount deposited in the PPF account.
Cheap Interest Rate
One of the advantages of taking a loan from a PPF account is that the interest is very low. The interest rate of PPF loan is only 1% higher than the interest rate of PPF account. That is, if you are taking 7.10 interest on PPF account, you have to pay 8.10 interest on taking loan. However, when you compare it with a personal loan, you will find this interest very low.
Pay loan as per convenience
You get PPF loan based on the amount deposited in PPF account. In such a situation, recovery agents do not bother you for its recovery. Also you don’t have to repay the amount by paying the lump sum. You can pay in 36 installments as per your convenience. That is, after taking the loan, you are given enough time to repay it.
The PPF account should be at least one financial year old, only then you can apply for the loan.
Loan facility is not available on PPF account after completion of five years as after that you can partially withdraw the amount.
You can take only 25% of the amount available in PPF account as loan.
You get EMI facility to repay the loan. But you have to repay this loan in 36 installments.
You can take loan against PPF account only once. Even if you have repaid the previous loan, you do not get re-loan facility on this account.
How to Apply for Loan For
this you have to go to the branch of the bank where the PPF account is opened and apply for the loan by filling the form. Form D is used for this in SBI. Along with this, the loan amount and repayment period have to be written in the application. If you have taken any loan before then you have to mention it too. After this PPF passbook has to be submitted. After the entire process, the loan is cleared in about a week.