Opening a Public Provident Fund (PPF) account for a minor child is a good option for building long-term savings for their education or other needs. PPF provides safety, tax benefits, and high returns. It allows parents or guardians to invest up to Rs. 1.5 lakh annually on behalf of the child. The document discusses PPF features, eligibility, who can open an account, investment limits, and provides examples of how investing in a PPF over 15 years can generate sizable funds for the child's future needs.

1. Evaluate the statement :
"Opening PPF accounts for minor children is a good option for building
a long-term corpus for their education or other requirements."

2. Agenda
1. About Public Provident Fund (PPF)
2. Eligibility
3. Features of PPF
4. Facilities from PPF
5. Profile Assumption
6. Who can open PPF A/C on behalf of Minor child?
7. Conclusion
8. Bibliography

3. About Public Provident Fund (PPF)
o Saving - cum - Tax saving investment instruments in India.
o The PPF scheme is a statutory of Central Government of India.
o Introduced by the National Saving Institute of the Ministry of Finance in 1968.
o The aim of the scheme is to mobilize small savings by offering an investment
with reasonable returns combined with income tax benefits.
Eligibility :
Who are eligible? Who are Not eligible?
Residents of India
Individual as legal guardian of a minor
Hindu Undivided Family(HUF)
Non Residents Indian(NRI)

4. Features of PPF
Features Particulars Remarks
Safety Higest As backed by thae Government
Initial Investment Rs. 100 to open PPF A/C
Minimum Investment Rs. 500 p.a. Penalty of Rs. 50, if this is Not met
Maximum Investment Rs. 1.5 Lakh p.a Combined limit of one or more account
Tenure 15 Years It can be extended for 1 or more blocks of 5 y
ears each
Interes Rate 8.1% .a. Compounded Annually (w.e.f.- 1.4.2016)
Investment option Lump sum or Max. Of 12 installment Via cash, cheque, PO, DD, online funds
transfer
Tax benefits Upto 1.5 Lakh p.a. • Exempt from Income Tax U/S 80C
• Interest on maturity is full Tax exempt
• Deposits are exempt from wealth tax
Nomination Allowed On opening the account or after
Joint Account Not Allowed Only 1 PPF account per person

5. Loan Facility from PPF :
o Loan can be availed against funds held in PPF account from 3rd year to 6th year.
o Loan is to be repaid within 36 month.
o Interest : 2% (If repaid within 36 months)
6% (If Not repaid within 36 months)
o Maximum 2 times loan can be availed.
o Second loan can be availed only if first loan is fully repaid.
Withdrawal from PPF :
o Partial pre-mature withdrawal can be made every year after the end of 6th year.
o withdrawals are subjected to conditions.
o Complete withdrawal of funds can be made after maturity.

6. As a parents, everyone wants his and her kids to excel in whatever field they choose their career. However, to pursue
higher education and to expend on other related activities, one needs to have funds to fulfill the requirements after 10
or 15 years.
Let's take an example :
Mr. Ghosh, aged 32,
Annual Income : Rs. 6 Lakh, Savings : Rs. 2.4
Lakh p.a.
Mrs. Ghosh, NGO worker
Daughter, aged 2 years
Profile Assumption :

7. Mr. Ghosh wants to open a PPF account for his minor child as a good option for his daughter's education or other
requirements.
 Demand of education is growing exponentially in India.
 Considering inflation, Mr. Ghosh made the following financial planning :
2031
Rs. 16,70,900
2016
Rs. 4,00,000
15 Yrs.
10%
2031
Rs. 41,77,250
2016
Rs. 10,00,000
15 Yrs.
10%
Or
Continued...

8.  If Mr. Ghosh wants to build a long-term corpus for his child's education, he should invest Rs. 5,000 p.m. in PPF A/C.
Continued...
Financial Year Amount Deposit(Rs.) Year End
Balance(Rs.)
Eligible Loan
Amount(Rs.)
Eligible
Withdrawal Amount(Rs.)
1 60,000 62,632.50 0.00 0.00
2 60,000 1,30,338.23 0.00 0.00
3 60,000 2,03,528.18 15,658.13 0.00
4 60,000 2,82,646.41 32,584.56 0.00
5 60,000 3,68,173.27 50,882.03 0.00
6 60,000 4,60,627.80 70,661.60 0.00
7 60,000 5,60,571.15 0.00 1,01,764.07
8 60,000 6,68,609.91 0.00 1,41,323.21
9 60,000 7,85,399.81 0.00 1,84,086.64
10 60,000 9,11,649.69 0.00 2,30,313.90
11 60,000 10,48,125.81 0.00 2,80,285.58
12 60,000 11,95,656.50 0.00 3,34,304.96
13 60,000 13,55,137.18 0.00 3,92,699.91
14 60,000 15,27,535.79 0.00 4,55,824.85
15 60,000 17,13,898.69 0.00 5,24,062.91

9.  If Mr. Ghosh wants to build a long-term corpus for his child's marriage, he should invest Rs. 12,500 p.m. in PPF A/C.
Continued...
Financial Year Amount Deposit(Rs.) Year End
Balance(Rs.)
Eligible Loan
Amount(Rs.)
Eligible
Withdrawal Amount(Rs.)
1 1,50,000 1,56,581.25 0.00 0.00
2 1,50,000 3,25,845.58 0.00 0.00
3 1,50,000 5,08,820.32 39,145.31 0.00
4 1,50,000 7,06,616.02 81,461.40 0.00
5 1,50,000 9,20,433.17 1,27,205.08 0.00
6 1,50,000 11,51,569.51 1,76,654.01 0.00
7 1,50,000 14,01,427.89 0.00 2,54,410.16
8 1,50,000 16,71,524.80 0.00 3,53,308.01
9 1,50,000 19,63,499.56 0.00 4,60,216.59
10 1,50,000 22,79,124.27 0.00 5,75,784.76
11 1,50,000 26,20,314.59 0.00 7,00,713.95
12 1,50,000 29,89,141.32 0.00 8,35,762.40
13 1,50,000 33,87,843.02 0.00 9,81,749.78
14 1,50,000 38,18,839.55 0.00 11,39,562.14
15 1,50,000 42,84,746.80 0.00 13,10,157.30

10. Who can open PPF A/C on behalf of Minor child?
As per PPF rules :
• A guardian can open PPF A/C for Minor child, where guardian is either Father or Mother.
• In case of parents are Not alive, then any other guardian under the Law can open PPF A/C for minor children.
Example : Imagine there is a Father(F) and Mother(M) and there are two minor children - C1 and C2.
Now, Here are these 3 scenarios possible :
Scenario : 1 Father has 1 PPF A/C for self, and is guardian for each child. Wife has no PPF A/C.
Father can claim maximum Rs. 1.5 Lakh
U/S 80C & can deposit maximum Rs. 1.5
Lakh under all 3 PPF A/C.
F
M
C1
C2

11. Scenario : 2 Mother has 1 PPF A/C for self, and is guardian for each child, Father has no PPF A/C.
Mother can claim maximum Rs. 1.5 Lakh
U/S 80C & can deposit maximum Rs. 1.5
Lakh under all 3 PPF A/C.
Father has 1 PPF A/C for self, and one child. Mother also has 1 PPF A/C for self and another child.
Father can deposit upto Rs. 1.5 Lakh under self and
child and claim upto Rs. 1.5 Lakh U/S 80C and same
case with Mother also.
Continued...
F C1
M C2
Scenario : 3
F
M
C1
C2

12. Conclusion
 PPF account for minor children is a good idea if you want to build a long-term corpus for their education or
other requirements.
 PPF is benificial if the existing account of the parents or guardian is Not in exhaustion limit.
 It is important to consider the present limitation before opening a PPF account for minor.
 If the father is reaching the exhaustion limit, bring the mother into the role will balance the act of investing
the stated maximum limit of Rs. 1.5 Lakh.
Bibliography :
o https://en.m.wikipedia.org/wiki/Public_Provident_Fund_(India)
o http://www.jagoinvestor.com
o http://m.rediff.com/money/2007/feb/20ppf

13. Thank You