PPF withdrawal rules: What to do in a crisis?

• PPF holders can make partial withdrawals after 5 years
• Max withdrawal is 50% of the balance from the 4th preceding year
• Premature closure after 5 years attracts a 1% penal interest rate

Kolkata: PPF or the Public Provident Fund is one of India’s most popular and most trusted long-term guaranteed-return savings schemes. It offers attractive

interest rates and also income tax benefits. Millions invest in PPF and use it for a variety of financial goals such as use as a pension fund after retirement, funding education of children, buying an apartment, footing wedding expenses of a daughter or son and even for medical expense in old age. Though the essence of PPF is saving in the long-term, there are provisions for early withdrawal in case of unforeseen and dire need of funds. However many account holders are not sure about how one should withdraw funds from PPF before the initial lock-in period of 15 years ends. There are rules governing partial withdrawals and premature closure of a PPF account.

PPF withdrawal rules

PPF rules clearly pay down the conditions governing particle withdrawal and premature withdrawal from an account. Please note than a PPFaccountholder can make partial withdrawals after 5 years of opening the account. And there is no penalty for early withdrawal of funds. This means one can make partial withdrawal only from the start of the sixth financial year. “The maximum amount that can be withdrawn is 50% of the account balance at the end of the fourth year preceding the withdrawal year, or 50% of the balance at the end of the year prior to the withdrawal year, whichever is lower,” says an article on ICICI Bank website.

Premature closure of PPF account

Premature closure of a PPF account is allowed in certain conditions such as medical emergencies, footing higher education fees etc. But it is allowed only after the completion of five full years of investment in the account. If a subscriber opts for premature closure, a penal interest of 1% will be charged since the opening of the account. Therefore, there can be significant loss of interest income in case of premature closure of a PPF account.

How to withdraw from PPF

One has to visit the bank or post office where the PPF account is maintained. Then a few steps have to be completed. These are:

• Filling in a prescribed form with relevant details
• Furnish all necessary documents.
• If the application is approved, the money will be transferred to the savings bank account.