The Central Bank of India is one of the oldest banks in the country, established in 1911. In 2009, the bank was refinanced and is now among the largest banking networks in India. Central Bank provides a host of financial services to entities, of which the Public Provident Fund is one.
Individuals can choose to open a Central Bank PPF account to mobilise their idle funds or set aside a portion of their income to develop a corpus for the future. However, individuals must familiarise themselves with this savings scheme to deftly capitalise on it, and optimise their benefits.
Public Provident Fund is an Indian government-sponsored savings scheme under the purview of the PPF Act, 2019. It allows individuals to create a substantial corpus over time and also offers tax benefits. Several banks in India are authorised to facilitate a PPF account, and one of them is the Central Bank of India.
The eligibility criteria for the Central Bank of India Public PF account, as per the PPF Act guidelines, are–
Apart from these specifications, a single individual cannot hold joint PPF accounts.
Individuals can open a PPF account with the Central Bank by visiting their nearest branch. They will need to fill out –
One also needs to furnish the following documents:
A bank official might ask for additional documents if required.
An individual can open an account with Rs. 100. The annual deposit amount is capped at Rs. 150,000, and it is mandatory to deposit at least Rs. 500 in total in a year.
If an individual holds an account in his/her name and their minor’s name, he/she can contribute a combined maximum contribution of Rs. 1.5 lakh.
Every account holder must keep their PPF deposit locked for a minimum of 15 years with the Central Bank. Individuals can extend the term of their Central Bank PPF account by blocks of 5 years, which is not subject to any upper limit. Also, individuals can choose not to contribute any additional amount in that extended period.
One can choose to withdraw prematurely from their accounts only after the completion of the 6th year. Also, withdrawal is subject to the following conditions –
For instance, suppose Ms Patel opens a PPF account with the Central Bank on 1st May 2013. She decided to make a premature withdrawal on 15th June 2020. The following table illustrates her contributions up until 2020.
| Year | Deposits (Rs.) | Balance (Rs.) |
| 2013 | 100,000 | 100,000 |
| 2014 | 50,000 | 150,000 |
| 2015 | 25,000 | 175,000 |
| 2016 | 75,000 | 250,000 |
| 2017 | 70,000 | 320,000 |
| 2018 | 80,000 | 400,000 |
| 2019 | 70,000 | 470,000 |
| 2020 | 90,000 | 560,000 |
Note – For the sake of simplicity, interest calculation was not included in the demonstration.
Here, at the end of the 4th year, i.e. 2016, the balance stood at Rs. 250,000. Since she is opting for withdrawal on 15th June 2020, the preceding financial year, i.e. FY20, her PPF balance was Rs. 560,000.
Ms Patel can withdraw a maximum of Rs. 125,000 since 50% of the such balance at the end of the 4th year is lower of the two options.
An account holder can also prematurely close his/her Central Bank PPF account after completion of 5 years in the following cases –
Individuals must provide relevant documents to support their claim to the concerned authority as well when applying for premature closure. Also, with early closure, such account holders receive a 1% less interest rate than what is prevailing.
It’s possible to nominate one or more individuals for a PPF account. An account holder can also define the share of each nominee.
Also, in case of the account holder’s death, the nominee(s) can transfer such an account to their names. But, they cannot additionally contribute to the existing balance.
Individuals can claim tax exemption on the deposited amount up to Rs. 1.5 lakh under Section 80C. The returns earned/accrued and withdrawals are entirely exempt from tax.
Individuals can choose to transfer their existing PPF account with the Post Office or any other bank to the Central Bank. It’s also possible to do the opposite. One can also transfer their PPF account from one Central Bank branch to another.
The Government of India revises the interest rate on PPF every quarter. The CBI PPF interest rate for the year 2023 is 7.1%.
Interest is calculated every month on the lowest balance between the 5th and the last date of a month. For instance, if the PPF account balance on 6th May shows Rs. 15000, and on 25th May it shows Rs. 10000, interest will be calculated on Rs. 10000.
Hence, it may be ideal for making monthly contributions in a Central Bank PPF account before the 5th of any month and not making any withdrawals in between to earn more interest.
These monthly interests are added to the principal at the end of each year. From thereon, they also earn interest. For example, suppose FY2020’s PPF balance stands at Rs. 2 lakh, and in 2020, such account holder earns Rs. 20,000 as interest. Henceforth, he/she will earn interest on Rs. 220,000 plus whatever contributions are made in 2021.
Upon maturity, the Central Bank PPF account interest rate is derived via a weighted average method, accounting for all the rates throughout such period.
PPF is one of the most secure savings options offering guaranteed returns. With the aforementioned information under cognition, an individual can opt for this scheme to derive maximum benefits from their investment.
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