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The PPF full form is Public Provident Fund, a long term savings account set up by the Union government that pays 7.1% a year at present and gives tax free interest. Anyone resident in India can open one at the post office, or at a bank allowed to run the scheme, with as little as 500 rupees a year.
A PPF account runs for 15 financial years. You may deposit up to 1.5 lakh in each of those years, take a small loan in the early years, and make one partial withdrawal a year once the account is old enough. This page explains the meaning and the main rules. For the opening process, see the PPF account guide.
At a glance
Full form
Public Provident FundRun by
Ministry of Finance, through post offices and authorised banksInterest
7.1% a year, credited every 31 MarchDeposit
500 rupees to 1.5 lakh in a financial yearLock in
15 full financial years, extendable in 5 year blocksTax
Exempt: deposit (old regime 80C), interest and maturity
PPF full form in banking, and why car shops use it too
In banking and savings, PPF means Public Provident Fund. The word provident means saving for the future, and the account was designed for people without an employer provident fund, such as shopkeepers, farmers and the self employed. Salaried people can hold one too.
If you searched for the PPF full form in car care, that is something else. Car shops use the same letters for paint protection film, a clear plastic layer stuck on a car's body. That film has no link with this savings scheme. Everything below is about the Public Provident Fund.
What is PPF and how does the account work
- One account per person. A parent can open one more for a minor child, but the combined deposit across both stays within 1.5 lakh a year.
- Joint accounts are not allowed. A nominee can be added.
- Money may go in as a single lump or spread through the year, in cash, by cheque or through net banking from a linked savings account.
- A non resident Indian cannot open a new account. One opened while resident continues to maturity.
- The balance cannot be attached by a court order to recover a debt.
Skip the 500 rupee minimum in any year and the post office flags the account as discontinued. It can be revived by paying 500 rupees for each missed year and a fee of 50 rupees per year.
Rate and how PPF returns are worked out
The rate for October to December is 7.1%. The Union government reviews it every quarter. Each month, the smallest amount sitting in the account from the 5th to the last day earns interest, and twelve months of such interest are booked together every 31 March. So money paid in by the 5th earns that month's interest. The current and past rate trend is on the PPF interest rate page.
PPF 1000 per month for 15 years: a worked example
Picture a saver who sends 1,000 rupees in early each month, always before the 5th, for 15 years. You pay in 1.8 lakh in total. At the current rate of 7.1%, held steady, the balance would be about 3.16 lakh at maturity, so roughly 1.36 lakh is interest.
Paying the full 12,000 rupees in one go before 5 April each year earns a little more, about 3.25 lakh, because each rupee sits in the account longer.
Rates change, so treat this as a guide only. Try other amounts with the PPF calculator.
PPF lock in period and what happens at maturity
The lock in ends only when 15 whole financial years follow the opening year. So an account opened in May or in February of the same financial year matures on the same day: 1 April, once 15 whole years have passed after that opening year ends.
At maturity you have three choices:
- Close it and take the whole balance.
- Extend it for 5 more years without new deposits. The balance keeps earning interest, and one withdrawal a year is allowed.
- Extend it for 5 years with deposits. For this, Form 4 must reach the office within one year of maturity.
Extensions can be repeated any number of times.
Loan against PPF and partial withdrawal
| Facility | When | How much |
|---|---|---|
| Loan | From the 3rd to the 6th financial year | 25 percent of your balance as it was two years before the loan year. Interest is 1 percent above the PPF rate. |
| Partial withdrawal | From the 7th financial year, once a year | Half of the smaller figure: the closing balance four years back, or last year's closing balance |
| Premature closure | After 5 financial years | Only on grounds of grave illness in the family, college studies of the holder or a child, or a move abroad. The rate paid drops by one point, applied right back to the start. |
Forms and worked cases sit in our guide to taking money out of PPF.
Tax treatment and the PPF passbook
PPF has exempt status at all three stages. Deposits up to 1.5 lakh qualify for the section 80C deduction if you file in the old tax regime. The yearly interest and the closing amount are not taxed in either regime, and no TDS is cut.
Your passbook is the main record. Get it updated at the branch every year after 31 March so the interest entry shows. Post office account holders can also check the balance through India Post internet banking once it is activated at the counter.
EPF vs PPF in one table
| Point | PPF | EPF |
|---|---|---|
| Who can join | Any resident individual | Employees of covered establishments |
| Who pays in | You alone | You and your employer |
| Rate set by | Ministry of Finance, each quarter | EPFO, each year |
| Term | 15 years, extendable | Till retirement or job exit |
Both are long term. Which suits you depends on your job and cash needs, so talk to the savings counter staff or a registered adviser. For a girl child, also look at Sukanya Samriddhi Yojana.
Frequently asked questions
What is the PPF full form in banking?
Public Provident Fund. It is a savings account backed by the Union government, available at post office counters and at banks allowed to run it.
What is the PPF lock in period?
Fifteen full financial years after the year of opening. Loans and partial withdrawals are allowed in between, within limits.
How to invest in PPF?
Go to any post office counter, or a bank branch that handles PPF, with KYC papers and at least 500 rupees. After that, pay in whenever you like during the year, in cash or by transfer.
How to check PPF balance?
Update the passbook at your branch. Bank account holders can see it in net banking, while post office customers can use the department's e-banking once the counter switches it on.
Can I hold two PPF accounts?
No. Nobody is allowed a second account in their own name. A second account found later is closed with the deposit returned, usually without interest.
Is PPF interest taxable?
No. PPF interest is exempt, and nothing is taxed when the account closes.
Official sources
- India Postwww.indiapost.gov.in
- National Savings Institutewww.nsiindia.gov.in
- Department of Economic Affairsdea.gov.in
Rules, amounts and portals can change. Check the official source before you apply or deposit.