One should know that one can avail the loan on PPF (Public Provident fund) account. But there are some rules and regulations for getting loan on PPF account which are as under.
How to get the loan:-
The loan on PPF is only due after the expiry of one financial year from the first subscription made. For example if the first subscription is made on October 2011, the loan only can be taken on PPF account on April 2013, after the expiry of fiscal year 2012. The loan only can be taken before the expiry of 5 fiscal years like in this example loan only can be taken before March 2017.
The loan amount which one can take loan is 25% of the balance of the account which is two years back in your account to the year in which loan is applied.
Like if you choose to loan in the third year, the balance of first year will be considered whereas if the loan is taken on the fourth year, the balance of second fiscal year will be considered and 25% of the account balance will be given as loan.
The PPF rate of interest is 8% per annum and the loan will be given 1% higher than the PPF rate of interest, so the loan rate of interest will be 8+1=9%.
Government has recently made some amendment in the rules of PPF. The rate of interest on ppf has been increased 8.6% to 8% whereas the loan rate is increased 2% to 1% on higher side. So the rate of interest on loan of PPF will be 10.6%.