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Need Emergency Cash? How Your PPF Account Can Be a Cheaper Way to Borrow
M
Moneycontrol•11-10-2026, 12:45
Need Emergency Cash? How Your PPF Account Can Be a Cheaper Way to Borrow
- •PPF accounts allow account holders to take a loan against their balance during a specific limited period, between the third and sixth financial years.
- •Borrowers can take up to 25 percent of the eligible PPF balance based on the balance at the end of the second financial year prior to the loan application.
- •The interest rate on a PPF loan is charged at one percent per year on the principal, making it significantly cheaper than a typical personal loan.
- •The principal must be repaid within a maximum period of 36 months, followed by the interest payment in two monthly instalments.
- •Partial withdrawals are also permitted starting from the seventh financial year, offering another alternative if repayment is a concern.
Key Questions Answered
The loan facility against a PPF account is available for a limited period, starting from the third financial year after the account is opened until the end of the sixth financial year.
You can borrow up to 25 percent of the eligible PPF balance, which is calculated based on the account balance at the end of the second financial year immediately preceding the year in which you apply for the loan.
Under current rules, interest on a PPF loan is charged at one percent per year on the principal. The principal must be repaid within a maximum period of 36 months, after which the accumulated interest is payable in two monthly instalments.
