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Home / Saving Schemes

Public Provident Fund (PPF)

All salaried employees reap the benefits of their company's Provident Fund account maintained by the employer. For individuals who are unable to avail of the provident fund benefits the government has enabled them to save nevertheless and plan for their future retirement period.

Such individuals can open their PPF accounts at SBI's branches and its subsidiaries, also head post offices and selected nationalised banks since they function as 'Accounts Offices' for the PPF scheme. The interest earned under PPF is completely exempt from taxation, currently the rate of interest is 11 percent per annum.

The minimum annual contribution for PPF is Rs.100/- while the maximum is Rs.60,000/- This subscription also qualifies for rebate under Section 88. Since the subscription is payable in multiples as low as Rs.5/-, certain investors who like to enjoy complete liquidity of funds as far as possible contribute only at the end of the financial year. Loans can be obtained up to 25 percent of the balance by the end of the 2nd preceding financial year.

The interest rate is 12 percent per annum payable over 36 months. No loans can be availed after the end of the 6th financial year when the withdrawal facility begins.

Partial withdrawals form probably the best part of PPF. From the 7th year itself, the account holder is entitled to withdraw 50 percent of the balance to his credit at the end of the 4th or the 1st previous financial year, whichever is lower. This facility aids liquidity since the amount can be used for any purpose.

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