Public Provident Fund account is not just the investment-cum-tax-saving instrument but also used during a financial emergency. It acts as an avenue for a fundraiser. However, according to the PPF loan rules, an account holder can get a loan against its Public Provident Fund account. The PPF account holder should have contributed at least 3 years of PPF account opening and the PPF loan interest rate is just 1 percent.
PPF SEBI registered tax and investment expert Jitendra Solanki said, “A PPF account holder can get a loan against its PPF account from 3rd to 6th years of account opening. In this period, if a PPF account holder comes under any kind of financial stress, then a PPF account can be a good option to raise funds by using the PPF loan option. Most interestingly, the interest rate on loan against PPF is only 1 percent.”
Moreover, the Founder at goodmoneying.com, Manikaran Singhal said that loan against Public Provident Fund – short-term in nature. He additionally said that at the time of loan repayment, the amount taken in the form of loan gets deducted while PPF interest calculation.
In case of failing to repay the loan against the PPF account within the given tenure, Solanki said that the interest rate will become 6 percent.