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What is PPF?
Public Provident Fund (PPF) is a low-risk savings scheme offered by the Government of India (GoI). You can open a PPF account at your bank, post office, or online.
PPF is becoming an attractive investment vehicle for Indian citizens as the current Fixed Deposit rates are low and the Indian stock market seems bearish. The scheme is proving lucrative for citizens looking for safe investments. It is secure, offers good returns compared to FDs, and has tax benefits.
Some key points to note in PPF investment:
- PPF has a lock-in period of 15 years. You should make at least one deposit each year for 15 years.
- The interest rate is subject to change and not fixed. The current interest of 7.1% may or may not change in the next quarter. The Government revises the PPF rate every quarter.
- The minimum you can invest is Rs. 500/- whereas the maximum is Rs. 1,50,000/-.
- PPF has Exempt-Exempt-Exempt (EEE) benefit. The first E means that your investment amount is exempt from tax. The second E means that the income/interest earned from your PPF investment is exempt from tax. The third and final E means that the withdrawal of investment amount is exempt from tax.
- The PPF interest gets credited to your PPF account every year on the 31st of March. It might be created even a day earlier.
The page isn't about the pros and cons of PPF. The internet has enough information on that. Instead, this article aims to guide you through the PPF Application process at the Indian Overseas Bank (IOB). You will also learn how to make a PPF Deposit from the 2nd year onwards. The 1st year requires you to approach your IOB branch to make a deposit.
I couldn’t find much information online related to IOB PPF applications and payments. Being an anxiety-driven person, who depends on the almighty Google to answer all my life questions, this lack of info perplexed me. This page aims to fill that information gap.
My PPF Account
I started investing in PPF very recently. The only regret I have is not starting sooner.
This regret originated from hindsight bias, of course, after looking at PPF's past interest rates. It was as high as 12% in the 80s and 90s. But the historical performance of any financial instrument cannot be used to measure future returns. The chances are high of the current rate (as of May 2022) of 7.1% decreasing even further. The trend seems to be as such.
Even then, one cannot deny that PPF is a safe investment scheme as the Government of India backs it.
Opening a PPF Account
You can open your PPF Account at IOB in a few simple steps:
- Log in to your IOB Netbanking Account.
- On your Accounts page, search for the PPF option.
- Generate the PPF Account Opening Form. You will get an Application Reference Number. Note it down for communication purposes with the bank if required.
- You will need to fill out this form and present it with a passport size photograph at your IOB branch. It is an uncomplicated form that requires you to add your basic details and the nominee. I wish IOB allowed us to apply digitally since we now live in Digital India. However, for now, we have to let this inconvenience slide.
- I submitted the form at the IOB branch and a cheque with the required PPF amount.
- The amount was deducted from my bank account in a few days, and I was assigned a PPF Account Number.
- The PPF Pass Book will be mailed to your registered address.
How to Make PPF Payments Online for IOB
From the 2nd year onwards, you can deposit the PPF amount directly via the IOB Netbanking website.
To do this:
- Log in to your IOB Netbanking Account.
- Add your PPF Account as a NEFT beneficiary. The best practice is to add your PPF Account as a beneficiary in advance so that there is no waiting time at the last moment.
- Transfer money to your PPF Account using NEFT.
It is as simple as that.
Tips for Making IOB PPF Payments
- If the PPF payment channel is not open for the deposit, you might need to call the branch to open the channel personally. If it is not open, you will not be able to transfer the money. A message similar to "This operation cannot be completed at the moment" appears on-screen.
- If your fund transfer doesn't go through despite the channel being open due to issues like a slow network, you can write a written request to your IOB Branch to make the required transfer.
- Make deposits between the 1st and 5th of the month to get the interest for that month. If you deposit the amount after the 5th, you will lose out on earning interest for that particular month. If you plan to submit a cheque, do it well in advance, as it takes some time to clear a cheque.
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This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2022 Kalpana Iyer