If you haven’t already started on a long-term savings strategy, you could begin with a Public Provident Fund (PPF) subscription . A government-guaranteed fixed income security, this is very apt as a long-term savings instrument. Yearly subscriptions can be as low as Rs. 500 to as high as Rs. 1,50,000.

It counts being among the most secure investments you can have in this country. The interest earned on the PPF subscription is compounded; that means you not only earn interest in the money you put in, but you earn interest on the interest earned too. All the balance that accumulates over time is exempt from wealth tax.

A flip side, its an extremely liquid investment instrument. Its lengthy lock-in period works out to 16 years since the last contribution is made in the 16th financial year. In all, the PPF is a very good savings instrument, and you should consider investing in it.

What is a Public Provident Fund?
The Public Provident Fund (PPF) Scheme is a statutory scheme of the Indian Government under the provisions of the Public Provident Fund Act, 1968.

Who can open a PPF account?
Any individual can open a PPF account, either for himself/herself or on behalf of a minor.

Can two adults open joint PPF account?
No, two adults cannot open a joint PPF account. An account has to be opened singly with one or more nominations.

What is the process of PPF account transfer from a bank to a post office?
The cheque/draft will be drawn by designation and will indicate that it relates to ppf account number ‘so-and-so. On receipt of the PPF account-on-transfer along with the cheque or draft from the bank, a PPF account will be opened at the transferee post office. The process is similar to that of the opening of a new account. The transaction will not be included in the credit transfer journal but will be entered in the list of transactions like other new accounts opened by cash.

Can an Non Resident Indian (NRI) open a Public Provident Fund (PPF) account?
NRI cannot open a PPF account.

What happens to a PPF account in event of the depositor’s death? If a PPF account holder dies and there is no nomination, who gets the deposited amount?
If the amount is up to Rs. 1 lakh, the accounts office will pay it to the legal heirs of the deceased on receipt of application in prescribed form.

For how many years can a PPF account be extended beyond its initial 15 years of operation?
After the PPF account has been in operation for 15 years, it can be extended for five years at a time.

Can a PPF account be allowed to continue if the total deposit in a financial year falls short of the minimum of Rs.500 or should it be closed without interest?
If a subscriber does not subscribe Rs. 500 in the first year, subscriptions paid by him/her will be refunded to him without interest.