Loan Against PPF: Public Provident Fund or PPF account is not just an investment-cum-tax-saving instrument. During financial emergency, it can be used as an avenue for fund raiser as well. As per the PPF loan rules, an account holder can get loan against PPF account from 3rd to 6th year of PPF account opening and the PPF loan interest rate is just 1 per cent.
Speaking on loan against PPF SEBI registered tax and investment expert Jitendra Solanki said, "A PPF account holder can get 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 PPF account can be a good option to raise fund by using the PPF loan option. Most interestingly, interest rate on loan against PPF is only 1 per cent."
Speaking on the PPF loan rules Manikaran Singhal, Founder at goodmoneying.com said, "Loan against PPF is short-term loan in nature. It can be taken for a maximum period of 36 months means the loan against PPF has to be repaid within 36 months."
Singhal said that during the loan repayment, the loan amount taken as loan will get deducted while PPF interest calculation. Mean if a PPF account holder has ₹1 lakh in PPF account and the loan taken is ₹1 lakh. In that case the PPF interest will be counted on ₹50,000 balance till the loan against PPF is repaid. Currently, PPF interest rate is 7.1 per cent for April to June 2021 quarter.
On failing to repay loan against PPF account by 36 months Solanki said that the interest rate will become 6 per cent keeping rest of the norms applicable till the loan is fully repaid.
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