Interest rate, eligibility criteria, how to open

The Indian Postal Service is not only responsible for the delivery of parcels and posts but also performs various other extremely vital tasks such as providing savings and investment services to the citizens. One of the most prominent savings and investment schemes used by millions of people across the country is the Public Provident Fund (PPF) scheme. The Public Provident Fund provides a secure path to tax savings and risk-free investment for the public. It also offers very attractive interest rates for investors. Let’s take a closer look at how much interest investors can earn from a Post Office PPF account.

Since the Public Provident Fund is a government-supported investment program, the interest rate on the PPF remains the same for all post offices and banks that provide the PPF service. The PPF interest rate is announced quarterly by the Ministry of Finance. At the time of writing, the PPF interest rate is 7.1% per annum. Interest payments are made to investors on March 31 of each year. Additionally, interest earned on the PPF account is tax exempt under the Income Tax Act 1961. It is also important to note that interest on the PPF is calculated on the basis of the minimum balance of the investor’s account between the 5th and the last day of each month. Therefore, it is recommended that any PPF deposit be made before the 5th of each month.

A person must meet the following eligibility criteria if they wish to open a postal PPF account:

  • Is eligible to open a PPF account in a post office a natural person employed by a private company, independent or retired, or belonging to any other similar category.

  • A person can open only one Public Provident Fund account associated with his name. In the event that two PPF accounts are opened under the same name, the money from the second account will be refunded without interest and the account will be closed.

  • Guardians can open a PPF account on behalf of their minor child. However, in the event of the death of the guardian, the child cannot continue to use the PPF account. The money in the PPF account will be refunded and the account will be deleted.

  • NRIs (Non-Resident Indians) cannot open a public provident fund account. If NRIs have an open account that was activated while living in India, the account will remain until it reaches maturity.

Previously, individuals had to manually go to their local post office in order to open their PPF accounts. However, recently the government has introduced an online system to open PPF accounts at post offices. You can open a postal account online by following the exact steps below:

Step 1. Go to the DOP online banking page on the Indian Post official website and log in to your Postal Savings Account using your ID and password.

2nd step. Once you have successfully logged in, go to the ‘General Services’ tab and click on ‘Service Requests’.

Step 3: Under “Service Requests”, you will need to click on “New Requests” and then on the option “PPF Accounts – Open a PPF Account”.

Step 4. Deposit the amount you wish to invest. The minimum amount is ₹500 and the maximum limit is ₹1.5 lakh.

Step 5. Then select the Postal Savings Account from which you want to fund the PPF account.

Step 6. Accept the Terms and Conditions and enter your transaction password.

Step 7. Download your deposit receipt. Your PPF account will be created soon and you can access it in the “Accounts” section of the website.

Stephen V. Lee