Post Office Or Bank PPF Account: Features, Interest Rates

Public Provident Fund or commonly known as PPF accounts are secured savings options with fixed income, by the government. A Post Office PPF account will fetch you similar kinds of features like PPF accounts in other banks. People in rural or remote areas are more inclined towards Post Office PPF accounts because of the better reach of this public office. Even where banks are not available, a person can open a PPF account in the Post Office and can avail same features, offered by SBI or other banks. However, citizens living in the urban areas can also choose to open a Post Office PPF account, because of similar facilities and promising interests. PPF accounts generally offer far better interests than other saving accounts. A PPF account can be opened online or offline; the online form will be available on the Post Office or bank websites.

A PPF account provides the facility of both fixed and flexible deposits. It means you can deposit the money any time in an FY, with no burden of mandatory investments. In case you have a fixed income monthly and you are open to regular or systematic investments, you can deposit the money regularly. You can link your PPF account to another savings account, from where a fixed amount of money will be deposited to your PPF account regularly.

Interest rates

A PPF account will attract a 7.1% per annum (compounded yearly) as mandated by the RBI, and you will receive the total interest amount at the end of each FY. In a PPF account, you can deposit money any time in a year, you have to maintain a minimum balance of Rs. 500 and maximum Rs. 1,50,000 in an (financial year) FY. If one fails to deposit a minimum of Rs. 500 in an FY, the PPF account will be discontinued. The Post Office official website informs, "Discontinued account can be revived by the depositor before the maturity of the account by deposit minimum subscription (that is, Rs. 500) + Rs. 50 s default fee for each defaulted year."

You can make the deposits in lump-sum or installments, according to your conveniences by cash or cheque or pay online. The deposits will qualify for deduction under section 80C of the Income Tax Act, the term interests or the lump sum interest, both will be tax-free - making it a lucrative investment. You can take only one withdrawal up to 50% of the balance, in an FY after 5 years, excluding the year of account opening.

Yearly deposit (INR)	Interest rate	Tenure (lock-in period)	Total deposit amount after maturity	Total interest after maturity	Total maturity amount
10000	7.10%	15 years	150000	121214	271214
25000	7.10%	15 years	375000	303035	678035
100000	7.10%	15 years	1500000	1212140	2712140

The interest rate in the present quarter was remained the same as the previous quarter by the government; the rate changes every 3 months (quarterly).

Application regulation

A single adult who is an Indian resident can open a PPF account with a nominee, but a parent can also open a PPF account on behalf of a minor or your child or a person of unsound mind. You can open only one PPF account in a Post Office or a bank.

Maturity and account closure

Your PPF account will be mature after 15 FYs, excluding the FY of account opening. At that time either you can take the maturity payment and close the account, or you can retain maturity value in the account further without deposit. In the latter case, the PPF interest rate will be applicable and payment can be taken any time or can take 1 withdrawal in each FY. Or, you can also extend the account at Post Office or bank for 5 more years and so on, within 1 year of the maturity. However, premature closure is only allowed after 5 years, but at the time of premature closure, 1% interest shall be deducted.