How to Get Loan Benefits Under PPF Deposits?

PPF is popular in India as a tax-free and long-term investment scheme. However, now you can also get a personal loan under the same investment as well. The loan is approved against your PPF balance.

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To obtain a PPF loan follow these steps:

• Download the Form D.
• Fill up the form and then submit to the bank along with your PPF Passbook.
• If all goes well, you could get the loan within seven days.

The following are some of the most important points you know about PPF loans:

• The loan amount against your PPF balance is capped at 25% of the balance.
• You can only avail the loan between the third and sixth financial year of opening the PPF account.
• You have to repay the loan within 36 months. However, you can choose to either pay in lump sum or installments.
• The rate of interest charged on the loan is 2% higher than what you are receiving on the PPF from the government.
• Failing to repay the full loan within 36 months will attract an additional 6% rate of interest.
• You are allowed to take a second loan if you have repaid the first one.

Is PPF Loan a Good Idea?

Whether you should take a PPF loan or not depends on your requirements. A PPF loan is easy to get, may have a lower interest rate in comparison to traditional loans, and allow gives you the flexibility to repay in lump sum or installments. However, there are risks. For instance, if you are unable to repay within 3 years then you have to pay 6% extra interest rate. Moreover, you can also get 25% of the PPF balance as a loan. So, in the end, it’s your call.