What is PPF? PPF full form, meaning & interest rate explained.

The Public Provident Fund (PPF) was launched in 1968 by the National Savings Institute of the Ministry of Finance. PPF is one of the best and safest long-term investment options available in the country. Any individual can open a PPF Account, including minors, provided they are a resident of India. It was introduced to help people save and invest small amounts of money. PPF helps investors grow wealth in a steady and safe manner. It is ideal for those seeking a secure investment option that offers assured returns as well as tax savings.

How to optimise the returns on your PPF investment

PPF is an excellent option for those who prefer low-risk investments. Investing in a PPF Account helps you diversify your portfolio and provides tax benefits. To maximise your returns, you should ideally deposit funds in your PPF Account by the 5th of every month. This is because the interest is calculated on the lowest balance between the 5th and the end of the month.

PPF: Features & Benefits

A Public Provident Fund Account offers several advantages. Here are some key features and benefits:

• Assured returns: PPF offers guaranteed interest at 7.1%* annually (as of Q2 of FY 2024-25).

• Tax-free earnings & savings: The deposits you make in your PPF Account can be claimed as a tax deduction under Section 80C (total deduction allowed under Section 80C is ₹ 1.5 lakh across all options). This translates into savings of up to ₹ 46,800* annually in taxes. In addition, the maturity amount (capital and interest earned) is tax-free. Thus, PPF is an excellent option for tax-efficient wealth growth.

• Low investment requirement: PPF allows you to start investing with as little as ₹ 500 per year. The maximum investment allowed is ₹ 1.5 lakh per year.

• Power of compounding: You can benefit from the compounded interest earned in your PPF Account across the long investment tenure of 15 years.

• Loan facility: Avail loans against your PPF balance from the 3rd to the 6th year of investment.

• Transfer facility: PPF Accounts can be transferred from other authorised banks or post offices to ICICI Bank.

• Online management: Easily manage your PPF Account online, anytime and anywhere, through ICICI Bank Internet Banking and iMobile app.

• Flexible investment options: You can choose the frequency of your investment in PPF, whether it is yearly, half-yearly, quarterly or monthly, as per your convenience.

*These values are subject to change and may vary in the future.

PPF Account Eligibility

For Adults (18+ years):

• You must be an Indian citizen

• HUFs and NRIs are not eligible to open a PPF Account

• Annual contributions can range from a minimum of ₹ 500 to a maximum of ₹ 1.5 lakh.

For Minors (< 18 years):

• The minor needs to be a resident of India

• A natural or legal guardian can open the Account on the minor's behalf

• Until the minor reaches the age of 18 years, the guardian is in charge of the Account

• The guardian can contribute a minimum of ₹ 500 and a maximum of ₹ 1.5 lakh every year

• At the time of the PPF Account opening, a nominee must be registered.

How to open a PPF Account?

Here is the process of opening a PPF Account with ICICI Bank if you already have an ICICI Bank Savings Account:

• Log into your Internet Banking account or iMobile using your credentials

• Go to the ‘Accounts’ section and select ‘PPF Accounts’

• Keep your Aadhaar Card ready, since an Aadhaar Card is needed for e-Signing the digital PPF Account Opening form

• Enter the required details, set up standing instructions for regular contributions and E-sign the application

• Once completed, your PPF Account will be created and funds will be debited from your ICICI Bank Savings Account.

Documents required for opening a PPF Account

Having the correct paperwork is essential for opening a PPF Account and ensuring all necessary details are in place for future use. Depending on your relationship with ICICI Bank, different documents required to open a PPF Account. They are listed below:

For customers with a relationship with ICICI Bank that is less than five years old:

• A copy of the PAN Card

• A passport-sized photo

• Form A

For customers who have been banking with ICICI Bank for more than five years:

• A copy of the PAN Card

• A passport-sized photo

• Form A

• Proof of residence, such as a utility bill or passport

Tip to manage your PPF Account

This ensures your contributions are deposited on time and interest is calculated correctly. Regular monitoring helps you avoid missed payments, track the growth of your savings, and stay informed about your account status for better financial planning. Here are some tips to know:

1. Regular Contributions: To maximise the interest earned, use digital banking platforms of ICICI Bank to set up automatic annual payments before Apr 05 to ensure eligibility for the year’s interest.

2. Monitor Account Status: Regularly check your balance and interest accrual through the iMobile app or ICICI Bank’s Internet Banking for easy account management. Staying updated with PPF scheme details is essential.

3. Make Prudent Use of Partial Withdrawals: You can make partial withdrawals from your PPF Account starting from the sixth year. You should use the partial withdrawal option for emergencies but refrain from making frequent withdrawals.

4. Extend Your Account: To keep receiving tax-free interest, consider keeping your PPF Account open after the 15-year lock-in period. You can extend the Account in blocks of 5 years.

Withdrawals from PPF: rules & procedures

According to PPF regulations, you can access the funds in your PPF Account once the Account matures, i.e. after 15 years. After the 15-year PPF lock-in period is over, you can withdraw the accumulated funds with interest and close the Account. Partial withdrawals are allowed only after the completion of 5 financial years after the end of the 1st year in which a deposit was made.

To withdraw funds from your PPF Account, follow these steps:

• Get the withdrawal application form (‘Form C’) from ICICI Bank

• Complete the form with the required information

• Submit the completed form to the ICICI Bank Branch where your PPF Account is held.

What is Form C?

When you want to withdraw funds from your PPF Account, you must submit the duly filled Form C. Here is what Form C contains:

Section 1

You need to fill in your PPF Account number, the withdrawal amount and the number of years the Account has been active.

Section 2

This contains the PPF Account's starting date, total balance, history of withdrawals and the amount permitted for withdrawal. It is for office use and is signed by the Bank official.

Section 3

This section requests your Bank details for the transfer of the withdrawal amount to your Account. Additionally, a copy of your PPF passbook needs to be included.

Conclusion

Public Provident Fund (PPF) is ideal for all Indian citizens, including minors. While the full amount in the Account can be accessed only after 15 years, partial early withdrawals are allowed. This scheme serves as a long-term savings option and retirement savings tool, offering wealth accumulation and tax benefits for investors.