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

The Public Provident Fund (PPF) was launched in 1968 in India. PPF is one of the best long-term and safest investment options available in the country. Any individual can open a PPF Account including minors, provided they are residents of India. It was introduced to help people save and invest small amounts of money. PPF is an investment tool to accumulate wealth in a steady and safe manner. It is ideal for those seeking a secure investment option that offers returns and tax savings.

PPF Account Importance

PPF is an excellent option for those who prefer low-risk investments. However, it is important to understand what a PPF Account is and how you can invest in it. Investing in a PPF Account helps diversify your portfolio and provides tax benefits. To maximise your returns, you need to invest in PPF by the 5th of each month. This is because the interest is calculated based on the lowest balance between the 5th and the end of the month.

PPF Account Features & benefits

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

• Assured returns: The PPF Account offers a guaranteed interest rate of 7.1%* annually (Q2 of FY 2024-25).
• Tax-free Earnings & Savings: Earn tax-free deposits, interest, and maturity amount with a PPF account under Section 80C, while saving up to ₹46,800 annually in taxes—an excellent option for tax-efficient wealth growth.
• Low investment requirement: Start investing with as little as ₹ 500 and a maximum investment of ₹ 1.5 lakh per year. 
• Power of compounding: Benefit from the compounded interest earned in the PPF Account of a 15-year tenure with the option to extend in 5-year blocks.
• Loan facility: Avail loans against your PPF balance from the 3^rd to the 6^th 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. 
• Tax savings: Save up to ₹ 46,800 in taxes annually by investing in a PPF Account.
• Flexible investment options: You can choose the frequency of your investments, whether yearly, half-yearly, quarterly or monthly, according to your convenience.

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

PPF Account eligibility

While understanding the importance of a PPF Account, meeting the eligibility criteria is crucial to determine if you can open one. You must fulfil the following criteria to open a PPF Account with ICICI Bank:

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:

Log in to your ICICI Bank Account through Internet Banking or iMobile app: Access the ICICI Bank website or iMobile app and log in to your account using your credentials.

• Navigate to Bank Accounts: Go to the ‘Bank Accounts’ section and select ‘PPF Accounts.’
• Keep your Aadhaar Card ready: An Aadhaar Card is needed for e-Signing the digital PPF Account Opening form.
• Complete the Formalities: Enter the required details, set up standing instructions for regular contributions and E-sign the application.
• Account Creation: 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 are:

For customers with less than five years of relationship with ICICI Bank

• A copy of the PAN card
• A passport-size photo
• Form A

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

• A copy of the PAN card
• A passport-size photo
• Form A
• Proof of residence, such as a utility bill or passport

PPF Account Managing Tips

Follow these simple tips to manage your PPF Account:-

• Regular Contributions: To optimise interest, use online banking platforms of ICICI Bank to set up automatic annual payments before April 5th to ensure eligibility for the year’s interest.
• 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.
• Make Good Use of Partial Withdrawals: You can make partial withdrawals starting from the seventh year. You should use the partial withdrawal option for emergencies but refrain from making frequent withdrawals.
• Extend Your Account: To keep receiving tax-free interest, consider keeping your PPF Account open for over 15 years.

PPF withdrawal rules & procedures

According to the withdrawal regulations, you can access the funds from your PPF Account once they reach maturity. This means that after the 15-year PPF lock-in period, 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 1st year in which the deposit was made.

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

• Get the Form: Get the withdrawal application form (‘Form C’) from ICICI Bank.
• Fill the Form: Complete the form with the required information.
• Submit the Form: 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 a Form C. Here is the key information that it 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
  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 service manager.
• 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.your PPF Account is held.

Conclusion

Public Provident Fund (PPF) is ideal for all Indian citizens, including minors. While the full amount can only be accessed after 15 years, partial or 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.