The PPF scheme provides a loan facility from the third financial year till the end of the sixth financial year. The loan amount can be up to 25% of the balance in the account at the end of the second year immediately preceding the year in which the loan is applied for.
This can be a useful feature if you require funds for an emergency or any other financial need. Here are some key points regarding this feature:
Loan Eligibility: You can avail a loan against your PPF account from the third year of opening your account to the end of the sixth year. So, if you’ve opened your PPF account in the financial year 2023-24, you can take a loan against it starting financial year 2025-26 till financial year 2028-29.
Loan Amount: The loan amount can be 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.
Interest Rate: The interest charged on the loan taken against a PPF account is usually 2% more than the prevailing PPF interest rate.
Repayment: The loan against PPF needs to be repaid within 36 months. The repayment can be made either in a lump sum or in installments.
Second Loan: If the first loan is repaid within 36 months, a second loan can be taken till the end of the sixth financial year from account opening.
No Loan Availability: No loans can be taken from the seventh year onwards as the option of partial withdrawals becomes available.
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