Public Provident Fund, popularly known as PPF, was introduced in 1968 – 16 years after EPF, or Employees’ Provident Fund, was legislated. As the name implies both EPF and PPF have been designed to provide long-term financial security for an individual. While the EPF is meant only for employees (in any organisation that employs 20 or more persons), the PPF was meant for virtually anybody – that’s why the name ‘public’.
The most important point to note about PPF is that it carries a long maturity period of 15 years. When it was introduced, it was the instrument with the longest ‘gestation’ period. What it meant was that any individual, who opened a PPF account, was supposed to operate and maintain it for a minimum of 15 years. Now, in age era, maintaining a savings/instrument for a minimum of 15 years is a tall order indeed. Anyone could have a situation where financial emergencies would surface necessitating early withdrawal of funds. Therefore, the experts who designed the scheme introduced a few clauses governing early withdrawal of funds from the PPF for causes such as treatment for life threatening ailments of self, spouse or children, high education etc.
When can I withdraw PPF money before maturity
One cannot close a PPF account before 5 years from the date of opening the account. But after expiry of 5 years, one can close the account prematurely and withdraw the entire money. But if you want to make a partial withdrawal, you can do it after 6 years from the date of opening of the account. You can withdraw a maximum of 50% of the accumulated amount in the PPF account.
Penalty on early closure: There is a 1 percentage point reduction in the interest rates that the account earns in case of premature closure. If the interest is 7.1%, if the account is closed early, it will earn 6.1%.
Once the scheme matures after 15 years, one can withdraw the entire amount. One has to submit either Form C at the designated branch of the bank or post office where the account exists. However, rules allow one to continue a PPF account far beyond 15 years in multiples of blocks of 5 years. So, one can stretch investments till 20, 25, 30…. 40, 45 or 50 years or more to build a massive amount securely.
Public Provident Fund, popularly known as PPF, is a guaranteed-return investment that carries a long maturity period. It is important for any investor to know the early withdrawal rules for any scheme with a prolonged maturity period. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
