How Much You can get?
You can take a loan from the third year of opening your account to the sixth year.Also, the loan amount will be upto a maximum of 25% of the balance in your account at the end of the first financial year (if you opt for the loan in the third year).If you opt for a loan in the fourth year, the second year’s balance will be taken in to account and so on.
Let’s say the account is opened during the financial year 2007-2008. You can take the first loan during the financial year 2009-2010.
The amount will be upto a maximum of 25% of the balance in your account at the end of the first financial year (if you opt for the loan in the third year). In this case, it will be March 31, 2008.
You can avail a loan amount of up to a maximum of 25% of the balance in your account at the end of the second year immediately preceding the year in which the loan is applied for. For instance, if you apply for a loan in November 2011, you would get 25% of the amount that existed at the end of March 2010.
So if you apply for the loan in the third fiscal year, you can avail a maximum of 25% of the balance available at the end of the first fiscal year. If you opt for a loan in the fourth year, the balance at the end of the second fiscal year would be considered.
Provision Related to Loan Public Provident Fund Scheme (PPF), 1968
10. Loans:- (1) Notwithstanding the provisions of paragraph 9, any time after the expiry of one year from the end of the year in which the initial subscription was made but before expiry of five years from the end of the year in which the initial subscription was made, a subscriber may, he so desires, apply in Form D or as near thereto as possible, together with his pass book to the Accounts Office for obtaining loan consisting of a sum of whole rupees not exceeding twenty five percent of amount that stood to his credit to at the ends of the second year immediately preceding the year in which the loan is applied for.
(2) On receipt of an application under sub-paragraph (1) the Accounts Office may, after satisfying itself that the amount of loan applied for is not in excess of the limit prescribed in sub-paragraph (1) and that the applicant has, till the date of application, been subscribing according to the limit specified in paragraph 3, subject to the provisions of sub paragraph (3), sanction the loan and enter the amount in the pass book.
(3) Where the application is made by a person who has made subscriptions to the Fund on behalf of a minor of whom he is the guardian, he shall furnish a certificate in the following form, namely:-
‘ certified that the amount for which loan is applied for is required for the use of Who is alive and is still a minor.”
Repayment of loan and interest :-
At present, you can get a loan against PPF at an interest rate of 1% above the rate you receive on PPF. So till the time you are getting 8% on your PPF, the loan will be available at a rate of 9% per annum.
As per the recent decision by the government, the rates for PPF will be revised to 8.6% for the current fiscal. Also, the government decided to raise the loan rate to 2% above the rate you receive on PPF. So the effective rate for the loan would go up to 10.6%.
However, since you receive interest on the accumulated money in the PPF account, the effective interest remains 1% at present and will remain 2% in the future.
Repayment tenor: The principal amount has to be repaid within 36 months. The repayment can be made either in a lump sum or in two or more monthly instalments within the prescribed period of 36 months. Once, the principal is fully repaid, you need to repay the interest in two monthly instalments.
However, if you are unable to repay the full principal amount within 36 months, the interest rate on the balance loan amount would be hiked to 6% above the rate you receive on your PPF. In case you have repaid the principal but not the interest, the interest amount would be debited from your account.
Provision Related to Repayment of loan and interest in Public Provident Fund Scheme (PPF), 1968 :-
(1) The principal amount of a loan under this Scheme shall be repaid by the subscriber before the expiry of thirty six months from the first day of the month following the month in which then loan is sanctioned. The repayment a may be made either in one lump sum or in two or more monthly installments within the prescribed period of thirty six months. The repayment will be credited to the subscriber’s account.
(2) After the principal of the loan is fully repaid, the subscriber shall pay interest thereon in not more than two monthly installments at the rate of one percent per annum of the principal for the period of commencing from the first day of the month following the month in which the loan is drawn up to the last day of the month in which the last installment of the loan Provided that where the loan is repaid, only in part within the prescribed period of thirty six months, interest on the amount of loan outstanding shall be charged at six per cent per annum instead of at one per cent per annum from the first day of the month following the month in which the loan was obtained to the last day of the month in which the loan is finally repaid.
(3) The interest on the amount of loan outstanding under the proviso to sub-paragraph (2) and any portion on interest payable, but not paid, on any loan , the principal amount of which has already been repaid within the prescribed period of thirty six months, may, on becoming due, be debited to the subscriber’s account.
(4) The interest recoverable shall accrue to the Central Government .