Complete guide to PPF loan facility and partial withdrawal rules. Learn when you can access your PPF money, interest rates, limits, and step-by-step process.
PPF has a 15-year lock-in, but you can access some of your money before maturity through loans and partial withdrawals. Understanding these rules can help during financial emergencies.
PPF Liquidity Timeline
| Year |
Loan |
Partial Withdrawal |
Full Withdrawal |
| 1-2 |
No |
No |
No |
| 3-6 |
Yes |
No |
No |
| 7-14 |
No |
Yes |
No |
| 15 |
No |
Yes |
Yes (maturity) |
| 16+ (extended) |
Varies |
Yes |
Yes |
Calculate your PPF balance: Use our PPF Calculator.
PPF Loan Facility
When Can You Take a Loan?
| Year |
Loan Available |
| Year 1 |
No |
| Year 2 |
No |
| Year 3 |
Yes |
| Year 4 |
Yes |
| Year 5 |
Yes |
| Year 6 |
Yes |
| Year 7 onwards |
No (withdrawal available instead) |
Loan facility is available only from Year 3 to Year 6.
Loan Amount Limits
| Formula |
Calculation |
| Maximum loan |
25% of balance at end of Year 2 (for Year 3 loan) |
| For Year 4 |
25% of balance at end of Year 2 |
| For Year 5 |
25% of balance at end of Year 3 |
| For Year 6 |
25% of balance at end of Year 4 |
General rule: 25% of balance at end of (current year - 2).
Loan Example
Year 5 loan request:
- Balance at end of Year 3: ₹5,00,000
- Maximum loan: 25% × ₹5,00,000 = ₹1,25,000
Loan Interest Rate
| Period |
Interest Rate |
| Current |
PPF rate + 1% |
| If PPF rate is 7.1% |
8.1% loan rate |
Loan interest is 1% above prevailing PPF rate.
Loan Repayment Rules
| Rule |
Details |
| Repayment period |
Maximum 36 months |
| Principal repayment |
Can be in lump sum or installments |
| Interest payment |
Must be paid even if principal is unpaid |
| Default penalty |
6% extra on outstanding |
Loan Process
| Step |
Action |
| 1 |
Visit bank/post office with passbook |
| 2 |
Fill Form D (loan application) |
| 3 |
Specify loan amount (within limit) |
| 4 |
Submit with passbook |
| 5 |
Loan credited within 7-15 days |
| 6 |
Repay within 36 months |
Should You Take PPF Loan?
| Scenario |
Take Loan? |
Why |
| Emergency need, Year 3-6 |
Yes |
Only option |
| Can get bank loan cheaper |
No |
8.1% vs 9-10% personal loan (similar) |
| Small amount needed |
Yes |
Quick, hassle-free |
| Large amount needed |
Consider |
PPF loan limited to 25% |
Partial Withdrawal Rules
When Can You Withdraw?
| Year |
Withdrawal Available |
| Year 1-6 |
No |
| Year 7 |
Yes |
| Year 8-14 |
Yes (once per year) |
| Year 15 |
Yes (maturity) |
Partial withdrawal starts from Year 7 (after completing 6 financial years).
Withdrawal Limits
| Formula |
Calculation |
| Option A |
50% of balance at end of Year 4 (for Year 7 withdrawal) |
| Option B |
50% of balance at end of preceding year |
| Allowed |
Lower of Option A or B |
General formula: Lower of (50% of Y-4 balance) or (50% of Y-1 balance).
Withdrawal Example
Withdrawal in Year 8:
- Balance at end of Year 4: ₹6,00,000 → 50% = ₹3,00,000
- Balance at end of Year 7: ₹10,00,000 → 50% = ₹5,00,000
- Maximum withdrawal: ₹3,00,000 (lower amount)
Withdrawal Frequency
| Rule |
Details |
| Frequency |
Once per financial year |
| Consecutive years |
Allowed |
| Total limit |
Subject to formula each year |
Withdrawal Process
| Step |
Action |
| 1 |
Visit bank/post office |
| 2 |
Fill Form C (withdrawal application) |
| 3 |
Specify amount (within limit) |
| 4 |
Submit with passbook |
| 5 |
Amount credited within 7-15 days |
Loan vs Withdrawal Comparison
| Factor |
PPF Loan |
Partial Withdrawal |
| Available from |
Year 3 |
Year 7 |
| Available till |
Year 6 |
Ongoing |
| Maximum amount |
25% of (Y-2) balance |
50% of lower of (Y-4) or (Y-1) balance |
| Repayment required |
Yes (36 months) |
No |
| Interest charged |
PPF + 1% |
None |
| Impact on balance |
No reduction (until default) |
Permanent reduction |
When to Choose Loan vs Withdrawal
| Situation |
Choose |
| Year 3-6, temporary need |
Loan |
| Year 7+, permanent need |
Withdrawal |
| Don't want to reduce balance |
Loan (then repay) |
| Don't want interest burden |
Withdrawal |
Premature Closure Rules
When Is Premature Closure Allowed?
| Condition |
Year |
Penalty |
| Account holder death |
Any |
None (nominee gets full balance) |
| Medical emergency (life-threatening) |
After 5 years |
1% interest reduction |
| Higher education |
After 5 years |
1% interest reduction |
| Change of residency status (NRI) |
Any |
Account can be closed |
Premature closure is highly restricted - only for serious reasons.
Premature Closure Process
| Step |
Action |
| 1 |
Submit application with reason |
| 2 |
Provide supporting documents |
| 3 |
Medical: Doctor's certificate, hospital bills |
| 4 |
Education: Admission letter, fee structure |
| 5 |
Bank verifies and processes |
| 6 |
Balance paid after 1% interest deduction |
Extended Account (After 15 Years)
Options at Maturity
| Option |
Description |
| Full withdrawal |
Close account, get entire balance |
| Extension without contribution |
Keep balance growing at PPF rate |
| Extension with contribution |
Continue adding ₹1.5 L/year |
Extension Withdrawal Rules
Extension without contribution:
| Rule |
Details |
| Withdrawal |
Any amount, anytime |
| Frequency |
Once per year |
| Balance continues |
To earn PPF interest |
Extension with contribution:
| Rule |
Details |
| Withdrawal limit |
60% of balance at extension start |
| Frequency |
Once per year |
| New contributions |
Up to ₹1.5 L/year |
Special Situations
Account Becomes Inactive
| Situation |
Consequence |
Solution |
| No deposit for 1+ years |
Account inactive |
Pay ₹50 penalty/year + minimum ₹500 |
| Interest continues |
Yes, even if inactive |
- |
| Loan/withdrawal |
Not available if inactive |
Revive account first |
Minor's PPF Account
| Situation |
Rule |
| Loan/withdrawal |
Guardian can apply |
| When child turns 18 |
Account transfers to child |
| Combined limit |
With parent's PPF |
Joint Holders
PPF doesn't allow joint holding. Only one account per person.
Impact on PPF Balance
Taking Loan
| Action |
Impact on Balance |
| Loan disbursed |
No change |
| Interest payment |
Paid separately |
| Principal repayment |
No change |
| Default |
Loan amount + penalty deducted |
Taking Withdrawal
| Action |
Impact on Balance |
| Withdrawal |
Balance permanently reduced |
| Future interest |
Calculated on reduced balance |
| Future withdrawals |
Based on reduced balance |
Example: Withdrawal Impact
Balance: ₹10 L, Withdraw ₹2 L in Year 8:
- Post-withdrawal balance: ₹8 L
- Year 9 interest (7.1%): ₹56,800 (vs ₹71,000 without withdrawal)
- Lost interest over 7 years: ~₹1.2 L
Think carefully before withdrawing - you lose future compounding.
Practical Tips
When to Use Loan Facility
| Good Use |
Bad Use |
| Medical emergency (Year 3-6) |
Consumer purchase |
| Short-term bridge |
Avoidable expense |
| Can repay within 36 months |
Uncertain repayment ability |
When to Use Withdrawal
| Good Use |
Bad Use |
| House down payment |
Vacation |
| Child's education |
Avoidable luxury |
| Medical emergency (Year 7+) |
Poor planning |
Alternatives to Consider First
| Alternative |
Pros |
Cons |
| Emergency fund |
Instant access |
May not be enough |
| Debt fund redemption |
Quick, no interest |
May book loss |
| Personal loan |
Larger amount |
High interest (12-18%) |
| Loan against FD |
Lower interest (1-2% above FD) |
Need FD |
Quick Reference
Loan Summary
| Parameter |
Details |
| Available |
Year 3-6 |
| Amount |
25% of balance (Y-2) |
| Interest |
PPF rate + 1% |
| Repayment |
36 months max |
| Form |
Form D |
Withdrawal Summary
| Parameter |
Details |
| Available |
Year 7 onwards |
| Amount |
50% of lower of (Y-4) or (Y-1) balance |
| Frequency |
Once per year |
| Repayment |
Not required |
| Form |
Form C |
Conclusion
| Need Money |
Year |
Best Option |
| Year 1-2 |
- |
Can't access PPF |
| Year 3-6 |
✓ |
PPF Loan |
| Year 7+ |
✓ |
Partial Withdrawal |
| Post-maturity |
✓ |
Withdraw freely |
Key takeaways:
- PPF loan available Year 3-6 only (25% of balance)
- Partial withdrawal from Year 7 (50% of balance)
- Loan requires repayment with interest; withdrawal doesn't
- Withdrawal permanently reduces balance (less compounding)
- Use these facilities only for genuine needs
PPF's liquidity options are limited by design—to ensure long-term wealth creation. Use them wisely and only when truly necessary.
Plan your PPF: Use our PPF Calculator to see how withdrawals impact your final corpus.
