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In India, personal loans and PPF loans offer flexible funding for expenses like weddings and medical bills.
PPF Loan vs Personal Loan
Loan is an ingenious financial tool that helps the needy ones to get instant credit from a lender. There are several types of loans – auto loan, personal loan, medical loan, etc. It helps fending off the crisis or fulfill the requirement.
In India, many people rely on personal loans to cover major expenses like sudden medical bills, educational fees, home renovations and weddings.
They are approved in your name based on your income and credit history, not on your savings. The loan amount can go up to several lakhs, and you can use it for almost any purpose—from weddings and education to medical expenses or vacations.
What Is PPF Loan?
If you have a Public Provident Fund (PPF) account, you can take a loan up to 25% of your balance. This loan is secured, meaning your PPF balance serves as collateral. The interest rate is typically 1-2% higher than the PPF rate. It is repaid within 3 years (36 months). The advantage of this loan is that you continue to earn interest on your PPF account even after the interest is paid.
PPF Loan vs Personal Loan
| Feature | Loan Against PPF | Personal Loan |
|---|---|---|
| Interest Rate | Low — around 1% to 2% above the prevailing PPF rate (effective rate ~9–10%) | Higher — usually 10% to 24%, depending on credit score and bank |
| Eligibility | Based on your PPF balance; no income proof or credit score needed | Based on credit score, salary, and repayment history |
| Processing Time | Quick and simple — just fill a form at your bank or post office | May take a few days, with document checks and approval steps |
| Loan Amount | Limited — up to 25% of the balance at the end of the 2nd year preceding the loan application | Higher — can go up to Rs 20 lakh or more, depending on income |
| End Use | Flexible — can be used for any personal or business need | Flexible — can also be used for any purpose |
| Tenure | Must be repaid within 36 months | Typically 1 to 5 years |
| Prepayment Charges | No penalty for early repayment | Some banks may charge 2–4% of outstanding amount |
| Risk | Secured against your own PPF balance | Unsecured — depends on your repayment ability |
How To Take Loan Against PPF Balance
You can take a loan against your PPF account from the 3rd financial year up to the 6th financial year.
The loan amount is usually up to 25% of the balance at the end of the 2nd year preceding the loan year.
Step 2: Visit Your Bank or Post Office
Go to the bank branch or post office where your PPF account is held.
Some banks also allow online requests, depending on their services.
Step 3: Fill the Loan Application Form
Request the loan application form for a PPF loan.
Fill in details like:
Loan amount
Purpose (optional)
Your PPF account number
Step 4: Submit Documents
Minimal documents required — usually just your PPF passbook.
No income proof or credit score is needed since the loan is secured against your PPF balance.
Step 5: Loan Sanction
The bank or post office will verify your PPF balance and sanction the loan.
Usually, the process is quick, and approval can happen within a few days.
Step 6: Loan Disbursal
Once approved, the loan amount is credited to your account.
You can use it for any personal or business expense.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
October 22, 2025, 15:14 IST
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