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How to Get a Loan Against PPF Account: Complete Guide

How to Get a Loan Against PPF Account: Complete Guide

The Public Provident Fund (PPF) is one of the safest long-term investment options in India, offering guaranteed returns, tax benefits, and a lock-in period of 15 years. But did you know you can also get a loan against your PPF account balance?

This facility is especially useful if you need funds for short-term needs without disturbing your long-term investment. At IndiaLends, we aim to simplify your financial decisions—whether you’re applying for a personal loan or leveraging your PPF account.

Here’s everything you need to know about taking a loan against PPF account.

Eligibility for Loan Against PPF

Criteria	Rule
Account Type	Available for both self and minor accounts
Time Period	Loan can be availed from 3rd year up to 6th year of PPF account
Number of Loans	Only one loan can be taken at a time
Repayment	Must be repaid within 36 months
Interest Rate	1% higher than prevailing PPF interest rate

👉 For official scheme rules, visit the India Post PPF scheme page.

How Much Loan Can You Avail Against PPF?

The loan amount is up to 25% of the balance at the end of the 2nd year preceding the year of loan application.

Example:

If your PPF balance in Year 2 was ₹1,00,000
You can get a loan of up to ₹25,000 in Year 3

How to Apply for a Loan Against PPF Account

1. Visit the bank or post office branch where your PPF account is held.

2. Fill out Form D (Application for loan against PPF).

3. Submit required documents (ID proof, PPF passbook).

4. The amount will be disbursed directly to your bank account.

5. Repay in lump sum or installments within 36 months.

Repayment Rules

Principal amount can be repaid in one lump sum or installments.
Interest is charged only after principal repayment.
Interest must be repaid within 2 months of principal repayment.

👉 If loan is not repaid on time, it is charged at 6% higher than prevailing PPF interest rate.

Matrix-Driven Guide: Loan vs. Partial Withdrawal in PPF

Feature	Loan Against PPF	Partial Withdrawal
When Available	3rd to 6th year	After 7th year
Maximum Amount	25% of 2nd year balance	50% of balance
Repayment	Required (within 36 months)	Not applicable
Interest	1% above PPF rate	No interest
Purpose	Short-term liquidity	Long-term needs

IndiaLends Insight

Taking a loan against your PPF account is a smart way to get short-term funds without liquidating your investments. However, the amount is limited and only available in early years.

If you need larger funding or longer tenure, you can explore instant personal loans from IndiaLends—with flexible EMIs, higher eligibility, and quick approval.

Frequently Asked Questions (FAQs)

1. Can I take multiple loans against my PPF account?
You can take only one loan at a time. Another loan is allowed only after full repayment of the first.

2. Can I take a loan against PPF after 6 years?
No. After the 6th year, only partial withdrawals are allowed, not loans.

3. Is the loan against PPF taxable?
No. The loan amount is not taxable since it’s borrowed against your own savings.

4. Can I get a loan against my child’s PPF account?
Yes. A guardian can apply for a loan against a minor’s PPF account.

5. What happens if I don’t repay the loan?
Default leads to a higher penalty—6% above PPF interest rate.

Apply Now

Need funds without breaking your savings? Apply for a loan against your PPF account at your nearest post office or bank branch.

Looking for higher amounts and longer tenures? Get an instant personal loan from IndiaLends with minimal documentation and quick approval.