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What is a PPF?

A Public Provident Fund, commonly known and used as PPF, is a savings-cum-tax-saving scheme introduced by the National Savings Institute of the Ministry of Finance in the year 1968, which can be opened with either a Post Office or with any nationalized bank like the State Bank of India or Punjab National Bank etc. However, today private banks like ICICI, HDFC etc have also introduced PPF schemes. Today despite having lot of investment schemes, PPF continues to be quite popular and favourite amongst many investors in India and the primary reason for the same is its reasonable returns combined with income tax benefits and the very fact that it is backed by the Central Government makes it even more attractive.

Public Provident Fund (PPF) is a 15-year scheme which can be extended indefinitely in block of 5 years and in order to get the best out of PPF, the deposit in PPF account should be done before the 5th of the month. However, most of the investors deposit a lump sum amount right at the beginning of the financial year. As per the regulations, one can have only PPF account in his or her name and in case of a minor, same can be opened by parents and a person having one PPF account in a bank cannot open another PPF account in the post office or vice-versa and if by chance two accounts exists on one person’s name, then the second account will be considered as an irregular account and no interest will be granted on it till the time both the accounts are amalgamated.

Benefits of PPF Account

Features of PPF (Public Provident Fund):

The very essential features of PPF are as below:

  1. Tenure: The PPF has a minimum tenure of 15 years which can be extended in blocks of 5 years, if you want to.
  2. Investment Limits: If you are not very sure with the idea, you can make a minimum investment of as less as Rs 500 and extend it up to maximum of Rs 1.5 lakhs for every financial year. You can either make the payment in a lump sum amount or in 12 installments.
  3. Opening Balance: You can open the PPF account with amount as low as Rs 100.
  4. Deposit Frequency: You can make the deposits in your PPF account once in a year for duration of 15 years.
  5. Mode of Deposit: Deposit in PPF account can be made either by cash, cheque, demand draft or even online transfer.
  6. Nomination: You can assign a nominee for your account either at the time of opening the account or can do later on as well.
  7. Joint Accounts: There is no provision to open joint accounts and it can only be done in the name of one individual.
  8. Risk Factor: Guaranteed by the Central Government, PPF scheme has complete back up of the government and thus carries minimal risk.
  9. Who can invest in PPF: Anyone who has Indian citizenship can open PPF account with the authorized banks.

Reasons To Open A PPF Account:

There are more than one reason why PPF is quite a favorite investment option amongst Indians such as:

  • Flexible Deposit Options: PPF allows you to make a minimum deposit of Rs 500 which you can extend up to 1.5 lakh per financial year and you can do the same in 12 installments per year.
  • Frequent Job Transfers: Since job transfers and frequent movements are not rare anymore, PPF scheme allows you to transfer your PPF account. You can open a PPF account either with SBI or any of the nationalized banks and can shift it to the place you are moving to.
  • Assured Investment Return: PPF guarantees you an assured return, however the rate of return may vary as per the market present situation.
  • Safety: Funds in PPF account stay safe because firstly it is backed by the Central government and secondly the amount in a PPF account cannot be attached under any court with regard to a debt or liability.
  • Long-term saving instrument: You have to wait for 15 years before you withdraw PPF amount and while it could be a major put off for most of the investors, this very feature of PPF could be a smart saving tool as well because your money is locked in safely getting interest on it.
  • Tax relief: PPF amount is eligible for tax deduction up to Section 80C and the interest earned on it is not taxable as well.

How To Open A PPF Account With SBI?

Like mentioned in above lines, a PPF account can be opened with any nationalized bank or a post office and there could be no better option other than SBI. The task of opening a PPF account with SBI becomes even more easy if you are a SBI customer because in this case, you can open your PPF account in few minutes without any hassle. With the SBI digital service, you just to create and log in your SBI account and create a PPF account instantly. However, in order to do so, there are certain prerequisites which you would need to open a quick PPF account online with SBI, such as:

  • You should have a Savings Bank account with SBI.
  • Your Aadhar number should be linked to your bank account.
  • You should have net-banking or mobile banking activated for your account.
  • You should have an active mobile number because bank will send the OTP on the same mobile number.
  • If you are minor, you cannot open the PPF account online and have to visit the bank in order to do so.
  • You must be an Indian resident. There is no any age limit to open the PPF account.
  • If you belong to Hindu Undivided Family or are a Non-resident Indians (NRI), you cannot open a PPF account.

If you want to open a PPF account with SBI online, you need to follow below mentioned steps:

  • Visit SBI online portal at www.onlinesbi.com and log in with your credentials. In case you don’t have a netbanking account, you need to create one by filling up the required form in your nearest SBI branch.
  • Once you have logged in to your SBI account, you need to select “New PPF Accounts” under Standing Instructions.
  • After you have selected the New PPF Account option, it will take you to a new page where you have to enter details like name, address and PAN card number. On this very page, you will have to enter your bank account number from which you would like to link to PPF account and other branch details such as branch code and branch name. If you don’t know the branch name, you just have to enter the branch code which will display the respective bank branch.
  • You can list down the name of your nominees in this very section if you wish to, else you can leave it blank as well and fill in later on.
  • Once you have filled in the form, your personal details like address and nomination data if any.
  • Once all formalities are in place and details are verified, your PPF account will be created and will be displayed in your SBI net account along with your primary account number.
  • After the PPF account is created, you all you need is to take print of PPF online application form and visit your branch with required KYC documents and a photograph within 30 days.

However, if you do not wish to open the PPF account online, you can visit your branch with below mentioned list of documents and submit your application form:

  • Passport size photographs
  • Identity Proof – Passport, Aadhar Card, PAN Card, Driving License, Voters Id etc. The photocopies of the documents should be self-attested.
  • Address Proof – Passport, Aadhar Card, Electricity Bill etc.
  • Filled PPF account opening form.

Once your PPF account is opened with the SBI, you can make deposits in the same either online or offline and if you have opted for an online mode of payment, you can do so with the help of internet banking subsequent to linking your SBI savings/current account with your PPF account. You can make online payment to your PPF account can be made using NEFT, ECS and standing instructions whereas if you are going for an offline payment method, you can do so either by cash, cheque or draft. SBI netbanking allows you to keep a tab of your PPF balance as and when you wish to and you can do so by logging in to your internet banking and click on your PPF account number to check your balance. You can check your PPF account balance even if you do not have net banking and in order to do so, you have to get your PPF passbook updated on timely basis.

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