Allahabad Bank was founded in 1865 in Allahabad and is now headquartered in Kolkata. The banking institution was regarded to be the oldest joint stock bank in the country until its merger with another banking institution – Indian Bank.
Until the 31st of March, 2018 there were more than 3245 branches of the bank in India. It extends several financial products, services and schemes, including the Allahabad Bank PPF Account. This PPF account is considered to be one of the most effective ways of generating steady returns while availing income tax benefits.
In this article
What is Allahabad Bank PPF?
Allahabad Bank PPF Account can be described as a tax-saving instrument and a potent means of mobilising small savings. Being a government savings scheme, it functions to facilitate savings and helps build a retirement corpus or an emergency fund.
While there are several benefits of PPF account, individuals must gather information like – eligibility criteria, features and how to open PPF Account in Allahabad Bank online to streamline the process seamlessly.
What is the Eligibility for Allahabad Bank PPF Account?
The eligibility criteria for Allahabad Bank PPF account are as follows –
- Any resident Indian irrespective of their age can open a PPF Account at Allahabad Bank.
- In the case of minors, parents/grandparents/guardians can open a PPF account with the bank on their behalf. Notably, a parent can open only 1 account per child. All investments made by the parent will be clubbed to determine maximum investment limit.
- HUFs and NRIs are not permitted to open this account. However, if an individual had a PPF account with Allahabad Bank before becoming an NRI, they are allowed to hold the account until maturity. Such PPF accounts will not be extended.
- An individual cannot hold an account jointly under this scheme.
Besides these, individuals are required to submit a list of documents to open a PPF account with this banking institution.
How to Open PPF Account in Allahabad Bank?
One can open a PPF account with Allahabad Bank by visiting the nearest branch of this bank or through its online banking services.
Typically, individuals applying will be required to submit –
- Form A (it can be availed from any Allahabad Bank branch or bank’s website)
- Nomination Form E
- PAN Card
- Aadhaar card
- Proof of address
- Identity proof
- Bank Statement
- Passport size photographs
It must be noted that the bank may ask individuals to meet additional specifications or to submit other essential documents to open a PPF account.
Features of Allahabad Bank PPF Account
These are among the prominent features of Allahabad Bank PPF account –
- Deposit amount and frequency
One can open a PPF account at the Allahabad Bank with a minimum of Rs. 500. Individuals can contribute a lump sum each year towards their account. Notably, account holders can pay as many as 12 instalments in a year in case they opt for the monthly instalment plan. Typically, the maximum contribution in a given year cannot exceed Rs. 1 lakh.
Typically, the Allahabad Bank PPF Account comes with a 15 year maturity period. Account-holders are entitled to either close the account on reaching maturity or may renew it for a term of another 5 years for more than once. However, one can opt for such an extension within a year from the maturity date.
- Premature withdrawal
Accountholders can withdraw from their PPF account prematurely only if it has been active for 6 years since the initial investment.
For instance, if one had opened a PPF account Allahabad Bank in 2015, he/she can withdraw partially from his/her account from FY 2022-23.
Nonetheless, it must be noted that one cannot withdraw the entire deposit amount from his/her account. In fact, the withdrawal amount is capped at the lower of –
- 50% of the account balance at the end of the 4th fiscal year.
- 50% of the balance at the end of last year.
Suppose, Mr Rohan opens a PPF account with Allahabad Bank on the 1st of May 2014. Mr Rohan plans to withdraw prematurely on 15th of June 2020. This table below highlights his contributions towards his account –
|Year||Deposit Amount (Rs.)||Total Balance (Rs.)|
His corpus at the end of 4th fiscal year – Rs.2.4 lakh
So, 50% of Rs. 2.4 lakh = Rs. 1.2 lakh
His corpus at the end of the preceding year – Rs. 5.8 lakh
So, 50% of Rs. 5.8 lakh = Rs. 2.9 lakh
Therefore, Mr Rohan can withdraw a sum of Rs. 1.2 lakh from his Allahabad Bank PPF account.
- Loan facility
PPF account holders can avail a loan of at least 25% of the account balance and meet their immediate requirements smoothly. It must be noted that one can avail of this facility after 3 years have passed since the opening of the said account. Also, individuals can take subsequent loans once they pay off the previous debt; however, loans will not be sanctioned against the PPF account after 6 years.
- Tax benefits
Under Section 80C, PPF account holders are entitled to tax exemptions up to Rs. 1.5 lakh. The interest accrued on the PPF account is also tax exempted; while the deposit balance of the account is exempt from wealth tax.
- Nomination facility
Account holders can avail the nomination facility by submitting Form E. Typically, the Allahabad Bank permits a change in the nomination and share percentage of nominees.
In the event of the account holder’s death, the nominee or legal heir will receive payment from the banking institution once loans have been adjusted against the balance.
- Account transfer
Allahabad Bank PPF account holders can transfer PPF account to any authorised branch of Allahabad Bank across India.
What is the Interest Rate on PPF with Allahabad Bank?
The Central Government revises the rate of interest of the PPF scheme every quarter. The current rate of Allahabad bank PPF interest rate is 7.1%, and the same is compounded annually.
Interest is computed on the Allahabad Bank PPF account’s minimum balance between the 5th and the last day of a month. Interest is paid out on the 31st of March every year until maturity. Like discussed, the accrued interest is eligible for tax exemption.
One can use an Allahabad Bank PPF calculator to compute their account’s maturity value instantly. It helps to understand the impact of PPF interest rate in Allahabad Bank. Such a tool also proves useful in comparing the returns of different savings schemes and helps build a financial plan.