SBI is the largest bank in India having the maximum reach across the country as well as the biggest global presence of an Indian Bank. The bank caters to national and international customers providing them with unique banking solutions. SBI is a public sector bank and has many government savings and investment options that can provide them with risk-free returns and maximize their wealth along the way.
One of the most popular savings schemes with every age group is PPF (Public Provident Fund). The scheme is a favoured investment option among all classes of investors due to its many attractive features even after decades of its launch in the year 1968. It is an excellent tax saving as well as a corpus building instrument with a maximum of Rs. 1,50,000 that can be invested every year.
Given below are a few details of the PPF account offered by SBI.
Eligibility for SBI PPF Scheme
PPF scheme has clearly stated the various eligibility parameters that have to be met by the applicants for this scheme. SBI PPF account also requires the applicants to adhere to such eligibility requirements. These parameters are mentioned below.
- PPF accounts can be opened by any resident of the country for themself.
- Parents can also open a PPF account for their minor children subject to certain conditions. The primary condition is that both parents cannot open a PPF account for the same child. Only one parent is allowed to open a PPF for a minor child. PPF accounts can be opened by both parents in case of two children for each of the children.
- In the unfortunate event of the death of both the parents, the scheme allows the grandparents to open a PPF account on behalf of their grandchild/grandchildren as their guardians.
- The scheme also allows a person can also open an SBI PPF account on behalf of
- A person of unsound mind
- The scheme does not permit NRIs to invest in PPF. However, if a person is already invested in the scheme and subsequently becomes an NRI, this restriction does not apply to them. Such persons are allowed to continue to hold their investment in PPF till the maturity term of 15 years. However, they are not allowed to extend their investment for the further blocks of 5 years each.
- Savings account with any branch of SBI
- An Aadhar card has to be linked to such an account and the account holder needs to have net banking and mobile banking access as well.
Documents needed for SBI PPF Account
PPF accounts require the applicants to provide a set of documents that are mandatory for opening the account. Given below is the list of such documents.
- Form 1 (earlier Form A) for account opening which is duly filled and signed (printout of Form 1 can be filled online).
- Copy of PAN card
- Address proof of the individual as per Know Your Customer (KYC) norms (Passport, Aadhaar Card, Electricity Bill, etc.)
- Self-attested copies of identity proof – Aadhaar, PAN, Driving License, Voter ID, etc.
- Nomination form
- Passport Size Photographs.
How to Open PPF Account in SBI ?
A person can open a PPF account in SBI through online or offline modes. The process for each of such modes is mentioned below.
The offline procedure for opening the SBI PPF account is a traditional approach. The details of the same are given below.
- The offline procedure for opening a PPF account requires the applicants to visit their home branch or any other authorized branch of the bank to open a PPF account.
- At such a branch office, applicants will have to fill Form 1 and submit the same after signing it along with the mandatory set of documents mentioned above.
- The applicant will also have to pay the initial minimum deposit amount of Rs. 500 to open the account.
How to open PPF account in SBI online ?
SBI had a partially online procedure to open a PPF account. However, now the applicants can open a PPF account with any branch of the bank through a completely online procedure which is detailed below.
- Internet banking
- The first step for the online procedure for opening a PPF account through internet banking is to visit the website of the bank.
- The applicant will have to log in to their internet banking account using their username and password.
- After this, the next step is to click on ‘New PPF Account’
- The applicant will be taken to a new page where the basic details of the customer will be displayed.
- Customers have the option to open the account on behalf of a minor at this stage
- The next step is to enter the branch code of the customer’s home branch to proceed and click on ‘submit’.
- The customer will have to confirm all the details on the next page and then click on proceed.
- A PPF account will be created in the name of the customer (in the name of the minor if so opted).
- The customer will be able to view the statement for the PPF account through internet banking.
- In order to complete this online procedure, the applicant will have to visit the home branch within 30 days to provide the required documentation and the printed PPF online application Form. This form is available by clicking on ‘Print PPF Online Application Form’ After the above steps.
- Mobile banking
- This is another online procedure to open a PPF account online.
- The first step, in this case, is to download the SBI Yono app from the Google Playstore or Apple Store.
- The next step is to login into the account using login credentials.
- After logging in, customers will have to select ‘PPF Account’ to proceed and then select ‘Apply for a new PPF Account’ on the next page.
- The basic details of the customer will be displayed on the next page. They will also be given the option to open the account in the name of a minor at this stage.
- The customers will have to provide the details of the amount to be deposited and then click on submit after verifying the details.
- A new PPF account will be created in the name of the account holder and the customer will be able to view the PPF statement as well.
- Similar to internet banking, in this case too customers will have to visit their home branch with the required set of documents and the printed PPF online application form within a period of 30 days to complete the account opening process.
What are the features and benefits of the SBI PPF Account?
There are several features of the PPF account that makes it an evergreen investment option. Some of such features and benefits are highlighted below.
- The minimum amount that can be deposited under the PPF account is Rs. 500 and the maximum amount that can be deposited in any financial year is Rs. 1,50,000.
- PPF accounts come with a tenure of 15 years which can be further extended for multiple blocks of 5 years.
- Investment in PPF is eligible for a tax deduction under section 80C for a maximum amount of Rs. 1,50,000 in any financial year.
- Investors can earn fixed interest on their PPF investment. The current rate of interest for PPF accounts is 7.10% per annum. This interest is credited to the account of the investor on 31st March of every financial year that investment is held.
- Investors can also update the nomination at any point as well as have multiple nominations to the account where the share of each nominee is well defined.
- PPF accounts are easily transferable from one branch to another of the same bank or any other bank or even to any post office across the country without any extra charge.
- Investors are also allowed to avail of a loan against their PPF account. The amount of loan will depend on the duration of the account held the balance available in the PPF account.
When can a person withdraw from an SBI PPF Account?
Ideally, withdrawal from the PPF account is allowed only after maturity of the account, i.e., after 15 years. The amount withdrawn including interest accrued is eligible for tax exemption under the Income Tax Act 1961. However, the scheme allows partial withdrawals from the PPF account after the 5th year. The investor is also allowed to make premature withdrawals from the PPF account to the extent of 50% of the balance available under the PPF account at the end of 4th year.
However, the bank permits early withdrawal from the PPF account under certain circumstances such as,
- For treatment of any life-threatening diseases for parents, spouse, or children. The account holder will have to provide supporting documents like medical reports from a competent medical authority.
- For the educational expenses of the account holder or minor account holder. In this case too, supporting documents like proof of admission fees from a recognized university are required to be submitted.
- If a person becomes an NRI after opening the PPF account, they have the option to close it at the end of the 5th year as against maintaining it for the full term.
Can a person get a loan against SBI PPF Account?
SBI also allows the account holders to get a loan against their PPF accounts. The important points to be remembered with respect to such loans are mentioned below.
- Applicants need to submit Form D to apply for a loan against the PPF account.
- A loan can be availed from the PPF account of the investor after the completion of 3 years but not more than 6 years of such a PPF account.
- The account holder is eligible to get a maximum of 25% of the account balance available at the end of the 2nd year as a loan against the PPF account.
- The bank allows the account holder to apply for multiple loans against their PPF account provided the guidelines of the bank are met and the earlier loans are repaid.
- The current rate of interest on loans against PPF is 1% per annum for loans taken on and after 12th December 2019. Earlier, interest at the rate of 2% per annum was charged on such loans.
PPF is an essential investment that is a must in any person’s kitty. It allows the investors to earn risk-free returns as well as gradually build their wealth to meet their financial goals. PPF belongs to the EEE category of investments i.e. the deposit made, interest earned as well as returns upon maturity are tax-free. It is a classic form of investment for risk-averse investors and inventors looking for making tax-saving investments.
1. What are the restrictions in opening a PPF account?
A. the various restrictions in opening a PPF account are,
- HUFs and NRIs are not allowed to open a PPF account.
- Joint accounts are not allowed in PPF
- A person can have only one PPF account in their name. If they have multiple accounts such other accounts have to be closed or merged into a single account.
2. When does a PPF account become inactive?
A. If the investor does not deposit the minimum amount of Rs. 500 for any financial year, their PPF account becomes inactive. The investor can revive such accounts by paying a fine or penalty of Rs. 50 along with the minimum deposit of Rs. 500 for each of the years that the account was inactive.
3. How many loans can be applied per pers against the PPF account?
A. PPF account holders are permitted to apply for only one loan per financial year that they are eligible for.
4. How can the amount be deposited in the PPF account?
A. Account holders can deposit the amount in a PPF account through online modes (NEFT/ ECS or auto-debit from the savings account/current account of the investor) or offline modes (cash or cheque or draft). The amount can be deposited in a lump sum or in installments in the PPF account.