How to open SBI PPF Account and why to open PPF account in State Bank of India? Can we withdraw money from PPF account? What is PPF interest rate in 2016-17 & 2017-18?
Since all of us feel comfortable in dealing with a government bank for our long-term savings. For a long-term savings like PPF, most of us prefer to go through Post Office or SBI, though the facility is now available with other banks like ICICI too.
What is Public Provident Fund Account in SBI?
SBI PPF Account is a 15-year debt scheme with a lot of flexibility. You can keep the account in force by paying any amount starting from Rs. 500/-. The maximum permitted in a year is Rs. 1.5 Lakh. You can make a maximum of 12 contributions in a year. The interest will be calculated on a monthly basis but will be credited to the account at the end of every year. If you make payment before 5th of the month, the payment will be eligible for interest for that month. After 15 years, you can extend the term in blocks of 5 years.
How Interest is Calculated on PPF Account?
The government, at the beginning of every financial year, declares PPF interest rates.
The current rate of interest is 7.8%. The most attractive feature of PPF is that the entire maturity amount along with interest is tax-free.
If you are starting PPF at the age of 30 and keep paying Rs. 1 Lakh every year for the next 30 years, you will have around Rs. 1.1 Crore in your PPF account when you are aged 60, if the interest rate remains at 7.8%.
Let Us see as to how to open SBI PPF Account,
SBI PPF Account −How to Open PPF Account Online?
Yes, You can open SBI PPF Account online and by visiting the branch personally. Online option to open SBI PPF Account is now available. Once the account is opened, you can manage the transactions online.
How to open PPF Account Online ?
Here is a step by step process to open PPF account online in SBI
- Go to SBI bank site
- Log into SBI internet banking
- You will see e-services in the menu bar, click on e-services
- Go to New PPF account under e-service
- Your PAN number will be displayed if you are an existing customer
- Enter the SBI branch code where you want to open PPF account
- Your nominee details will be asked
- Click on submit button after filling nominee details
- You will be issued a reference number
- Print the PPF online application form, visit the nearest branch of SBI with your KYC documents and photograph.
- The limit to submit this form is 30 days.
- Your SBI PPF account will be added in the portal
How to open PPF Account Offline ?
- Identify the convenient branch of SBI, which offers PPF facility
Please note that all branches of SBI are not offering the PPF services. There are designated branches of SBI which offer PPF facility. You may find a branch where you can transact your account at your convenience. You can identify the designated branches, by visiting the nearest SBI branch in your area.
- SBI PPF acount opening form-Visit the designated branch with necessary documents
You have to visit the designated branch personally and collect the application for PPF from the branch. You have to submit the filled-up application along with the necessary documents. The documents required are similar to your KYC applications. You may carry the original and a self-attested copy of the documents. You have to submit one proof for your identity and another proof for your address with 2 recent passport-size photographs.
- Documents required for opening a SBI PPF Account
Identity Proof – Passport, PAN Card, Voter Identity Card, Driving Licence
Address Proof – Ration Card, Electricity Bill, Telephone Bill, Voter Identity Card
- Collect your PPF Passbook
Once you submit the above documents along with the filled-in application for PPF, you will be issued PPF Account passbook similar to a Bank passbook. Please verify the correctness of the data in the passbook such as your name, nominee name, etc.
- First-time deposit in SBI PPF Account
Yes, now your PPF account is ready. Using a Pay-in slip, you may make the initial deposit in your PPF account. You can pay any amount between Rs. 500 – 1.5 Lakh.
PPF Account Online Status
Going forward, you can manage the PPF account online. You may add your PPF account as a third-party account and can transfer amount like any other online payment. It is not necessary that you should have a bank account in SBI. You can do the online transfer from your bank account to the PPF account, by registering the PPF account as a third- party account.
ECS and Auto Debit facility are also available for PPF account. In Auto Debit or ECS, the amount gets deducted at regular intervals automatically. This is the best option as you do not need to visit the branch every time or login to your account whenever you deposit the money online.
It is better to visit the branch and update your passbook once in a while to ensure that your online payments are recorded correctly in the bank records.
Can I transfer my PPF account from an SBI branch to another branch/post office or
Post Office PPF to SBI PPF Account
Yes. You can transfer your PPF account to any other designated branches or to any Post Office dealing with PPF. You have to give a transfer request along with the updated passbook in the SBI branch for this.
The disadvantage in Post Office PPF account is that you cannot transfer money online, every time you need to go to the Post Office branch to deposit the required amount.
Who can open a SBI PPF Account?
All Indian citizens can open a SBI PPF Account (State Bank of India) by their own name or in the name of the minor i.e. in the name of son or daughter.
Also Hindu Undivided Family cannot open single PPF account by their name.
Can a Non-Resident Indian (NRI) open a SBI PPF Account?
Old Rule -The answer is no. An NRI cannot open a SBI PPF Account. But if a person has opened a PPF account while being the citizen of India, he can contribute the remaining amount in PPF account till the maturity of the account.
He can contribute the money to his account through NRE/NRO account also.
New Rule -If a person has opened a PPF account while being the citizen of India, he need to close the PPF account the day he becomes an NRI.
If NRI does not close the PPF account, the rate of interest would be reduced which is equal saving bank interest rate.
SBI PPF Account Benefits
The reason to invest in PPF account is tax exemption under 80C, which we call triple E i.e. Exempt-Exempt-Exempt
- Exempt at the time of investment
- Interest accrued is tax-free
- Maturity is tax-free
Also,there are many other options like tax-saving mutual funds (ELSS Mutual Funds), insurance to save tax under 80C.
When to open a PPF account?
Ideally, you should be investing in PPF account when your financial goals are far ahead like a span of 15-20 years. If you have short-term goals like 3-4 years, do not invest in PPF account, as you will not be able to withdraw money from PPF account.
Are there any other Banks to open PPF account?
Yes, you can also open PPF account in other nationalised banks, and also in some of the private banks like ICICI.
Risks associated with PPF account
Capital risk is protected in PPF account but Interest risk is not protected.
- What if the rate of interest reduced to 4%? It will not have any impact on small corpus; but if your corpus is large, the interest income will be very less
- What if the interest income is not tax-free
- But What if the maturity amount is not tax-free
Should I worry about depositing money before the 5th of every month?
No, you should not worry.
SBI PPF account credits interest on 31st March every year i.e. at the end of the year. So it hardly makes any difference.
History and Facts of PPF
Public Provident Fund (PPF) has a history which dates back to 1968. The Government introduced the scheme for non-government employees to provide them security at the time of their retirement.
At that point of time (1968-1969), the interest rates on PPF were a mere 4.8%.
Do you know the interest rates were highest from 1986-2000, a whopping 12%?
There was a sharp drop in interest rates on PPF from 2000-2003 when the rate of interest was reduced from 12% to 8%.
Previously, the rate of interest was changed only on a yearly basis, now the rate of interest can be changed quarterly.
|Year||Rate of Interest|
|Apr 1974 – July 1974||5.80%|
|Aug 1974 – March 1977||7%|
|Jan 2000 to Feb 2001||11%|
|March 2001 – Feb 2002||9.50%|
|March 2002 – Feb 2003||9%|
|Mar 2003 – Nov 2011||8%|
|Nov 2011 – Dec 2012||8.60%|
|Jan 2012 – Mar 2013||8.80%|
|Apr 2016 – Sep 2016||8.10%|
|Oct 2016 – March 2017||8.00%|
|Apr 2017 – June 2017||7.90%|
|July 2017 Onwards||7.80%|
PPF Account Rules – SBI PPF Account
What are PPF withdrawal rules in India? What are interest rates on PPF ? Where can I get the PPF withdrawal form? Can I take a loan from my PPF account?How can I save tax by investing in PPF? What is the maturity period of PPF? What are the minimum and maximum limits of investing in PPF?
Public Provident Fund(PPF) – Tax Saver under Section 80C
The Public Provident Fund (PPF) is the most popular tax savings option in Section 80C. Since the scheme is a government-sponsored scheme, there is no need to worry about the security of the amount. The scheme is the most flexible tax saver, because you can invest any amount in between Rs. 500 and Rs. 1 Lakh in a year depending on your requirement.
PPF – Limits, Locking Period & Maturity
It is a 15-year scheme but it has an option to increase the term in blocks of 5 years at the end of the 15-year period. So, if you are starting the PPF at the age of 30, it will mature when you are 45. But you can extend it in blocks of 5 years any number of times. If you extend it 3 times, it will run till your age 60.
You can open the PPF account in Post Office, State Bank and its associate banks. Now ICICI Bank is also offering online facility to pay the PPF account.
You must invest at least Rs. 500 in a year to keep the account in force. Otherwise, you have to pay a penalty of Rs. 100 to regularize the account. The maximum limit of investment per year is Rs. 1 Lakh only . You can pay this amount in lump sum or in installments.
SBI PPF Interest Rates 2017-18
The interest rate on PPF is decided by the government every year and will be declared in advance. The current rate of interest is 7.8%.
SBI PPF Withdrawal Rules 2017 – Loan Facility in PPF
Since we have already gone through the basic details of PPF. Let us go through PPF withdrawal rules:
Since it is a 15-year scheme, there will be need for early liquidity. Yes, you can take loan from PPF from the 3rd Financial Year to the 6th Financial Year.
If you have opened the PPF account in 1999-2000, you will be eligible to take loan from the year 2001-02. The amount of loan will be limited to 25% of the accumulation including the interest at the end of the 2nd immediately preceding year. So, if you are applying loan in the year 2004-05, you will get 25% of your account balance as on 31st March, 2003.You have to repay the loan within 24 months. Furthermore after repayment, you can again take a loan within the 6th year.
Premature Closure of PPF Account – Rules 2016
If your account has completed 5 years, then under following condition you can close SBI PPF account i.e. premature closure of PPF account
- If you, your spouse ,children or parents are diagnosed with life threatening disease
- Money required for higher education of account holder or minor account holder
In both cases you need to submit the necessary documents for premature closure of PPF account.
PPF Loan Rules – Interest Rates
The interest rate on this loan will be 2% above the PPF interest rate you receive.
PPF Partial Withdrawal Rules
To meet any emergencies, from 7th year you are eligible for partial withdrawal from your PPF account. You are eligible for only 1 withdrawal per year.
But If you have opened the PPF account in 1999-2000, you will be eligible for partial withdrawal from 2005-06. The withdrawal amount will be the lower of:
- 50% of your balance at the end of the immediately preceding year;
- 50% of your balance at the end of the 4th immediately preceding year.
In our example, if you are applying for partial withdrawal in 2005-06, you will get the lower of:
- 50% of your balance as on 31st March, 2005;
- 50% of your balance as on 31st March, 2002.
PPF Withdrawal Rules after 15 Years
After 15 years, if you are not interested in closing the account, you can also extend the term of the PPF in blocks of 5 years with or without fresh contribution. Your accumulation will get the interest every year. If you are extending without fresh contribution, you can withdraw any amount from the accumulation without any limit as per your requirement. But only 1 withdrawal is permitted in a year.
If you are extending the PPF with fresh contribution, then you are eligible for partial withdrawal of 60% of your accumulation as on the date of extension during the next 5- year period.
Is PPF Withdrawal Taxable?
You will get tax benefit under Section 80C while you invest and your maturity amount along with the entire interest is tax-free in PPF. So, PPF is one of the most popular tax saving tool and a good retirement savings.
So, what are you waiting for? Go and Open SBI PPF Account, if not opened already?
Also, what are your views on the Investment Strategy of PPF?
Is SBI PPF Account better than investing in tax saving mutual funds or insurance products like ULIPs or Endowment policies?
In Conclusion, SBI PPF account is a good tool for your retirement savings.
Please feel free to write if you have any queries about “PPF withdrawal rules”.