Educational guide
PPF Withdrawal Rules — Partial, Loan & Premature Closure
PPF appears illiquid but actually offers four distinct exit routes — partial withdrawal, loan, premature closure and extension with/without contribution.
// partial withdrawal (from year 7)
From the 7th financial year onwards, you can withdraw up to 50% of the balance at the end of the 4th preceding year, or the closing balance of the previous year — whichever is lower. Only one partial withdrawal is permitted per financial year.
// loan against ppf (years 3 to 6)
From the 3rd to the 6th year, you can take a loan of up to 25% of the balance at the end of the 2nd preceding year. The loan interest is 1% above the prevailing PPF rate and must be repaid in 36 months.
// premature closure (after 5 years)
After 5 completed financial years, the account can be closed early in three situations — life-threatening medical treatment, higher education abroad of the account holder or dependants, or change of residency status to NRI. A 1% interest penalty applies to the entire credited interest from inception.
// block extension after 15 years
At maturity you can extend the PPF account in 5-year blocks, with or without further contribution. The 'with contribution' option keeps you eligible for 80C; the 'without contribution' option still earns the PPF rate.
// frequently asked questions
A medical certificate from a competent authority, admission letter from a foreign university, or passport showing NRI status — depending on the reason. The bank/post office requires these along with the original passbook.