Most banks and post offices would allow online deposit of money into PPF (Public Provident Fund) accounts held with them. However, it is wise to check in advance before using the online mode for this purpose. There are three different methods of depositing money in your PPF account through the online mode.
Naveen Kukreja, CEO & Co-founder, Paisabazaar.com said that PPF subscribers can make online deposits in their PPF account through online transfer from their savings account. They can make direct online fund transfer if they maintain their PPF and savings account(s) with the same bank. Else, they have to use NEFT or ECS mandate to make deposits from savings account maintained with a different bank. “The best way to ensure regular and timely deposits in your PPF account is to link it with your savings account in the same bank and set a standing instruction in that savings account to auto-debit a fixed amount on a pre-set date for the PPF account,” he said.
Here are the methods of making an online payment to your PPF account.
1. NEFT mode
NEFT or National Electronic Funds Transfer is a method for the transfer of funds between bank accounts. It can be done online via Net-banking. For making online payments, you need to have a PPF account number and the IFSC of the bank branch with which the PPF account is held. NEFT transfer can be done from both savings and current accounts. You can make intra-bank or interbank transfers. Since the NEFT process operates in half-hour interval/batches, it may take a few minutes/hours for your money to get transferred into your PPF account.
2. ECS Mandate
ECS or Electronic Clearing System mandate is a process by which you can transfer a fixed amount of money periodically from one bank account to another. You can set an ECS mandate for a PPF account. Through the ECS mandate facility, the money gets deducted from your bank account automatically and gets deposited in the PPF account. This process is used in case of making an interbank transfer of money.
To initiate this process, you need to visit the nearest bank branch where you need to sign the ECS mandate form and submit the same with your bank. As per the signed mandate, the amount will automatically get deducted from your bank account (savings or current) on a pre-fixed date and get deposited to the PPF account on the same day.
3. Standing instruction
It is a process where you can ask the bank to debit and transfer money from your bank account to your PPF account held within the same bank. It is a flexible system where one can deposit money either on a monthly basis or on a daily basis subject to the maximum deposit limit of Rs 1.5 lakh for PPF accounts in a financial year. Once you have given the standing instruction to the bank, the money gets deducted from your bank (savings/current) account automatically and gets deposited in your PPF account.
Adhil Shetty, CEO, Bankbazaar.com said that PPF accounts can be opened via authorised banks and standing instructions can be set to automatically transfer funds from your bank account to your PPF account. The minimum deposit you need to make in your PPF account every year is Rs 500. Monthly standing instructions can be set allowing you to invest for the full 15-year tenure of your PPF account. Standing instructions are not mandatory. “You can also open your PPF account without setting these instructions,” he said.
Some of the above online methods of transferring money into your PPF account may involve certain charges depending on the amount being transferred, the time of transfer and the bank/post office in question.
How to make the best use of transferring money online?
The best way to make use of these online methods of payment is to deposit your money before the fifth of every month. Kukreja said that interest on PPF deposit is calculated every month on the basis of the lowest balance maintained between the fifth and the last day of every month.
“Suppose you have Rs 1 lakh balance on the 4th day of a particular month and you deposit another Rs 50,000 in the PPF account on the 10th day of that month, thereby taking your balance to Rs 1.5 lakh. The interest for that month would be calculated on Rs 1 lakh as that was the lowest balance maintained between 5th and the last day of the month. Hence, depositing the money in your PPF account before 5th of the month would help you earn higher interest on your PPF balance,” he said.