If you are in need of money this Diwali, then your Public Provident Fund (PPF) account can meet your need. You can take a loan against PPF at an interest rate of just 1%. Today we are telling you about the facility of loan against PPF.
You can also take a loan against the deposit in the PPF account. You are entitled to take a loan from PPF from one financial year after the end of the financial year in which you have opened the PPF account till the end of the fifth financial year. Suppose if you have opened a Public Provident Fund account in January 2017, then you can take a loan from 1st April 2019 to 31st March 2023. According to the rules of the post office, if you apply for this Diwali loan, then you can take a loan of a maximum of 25% on the deposit till 31st March 2020.
The effective interest rate for the loan is only 1% higher than the interest on PPF. When taking a loan against PPF, the principal amount of the loan has to be repaid first, followed by interest. The principal can be repaid in two or more instalments or in monthly instalments. Interest can be paid in two monthly instalments or in a lump sum. If you have repaid the loan principal within the stipulated time, but some part of the interest is due, then it is deducted from your PPF account.
You can take a loan against the PPF account for a maximum period of three years i.e. 36 months. The loan taken during this period has to be repaid. A loan will be given once a year. You will be able to take the loan again only after paying the full amount.
If the loan is not repaid or only partially repaid within 36 months, the remaining loan amount will attract an interest rate of 6% per annum. This 6% interest rate will remain from the first day of the month following the month in which the loan is taken, till the last day of the month in which the last instalment will be paid. That is, the interest rate that was becoming 1% earlier, if the loan is not repaid within 36 months, it will become 6% from the beginning of the loan.
You have to apply for it by going where you have a PPF account. Apart from your PPF account documents and Aadhar card, some documents will have to be given.