Hassle-free way to invest in PPF

Banking is the sector which has benefited the most on account of advancement in information technology.  Today, though the number of transactions with bank has increased, one hardly visits the bank’s branch.  Most of the things are done at a click of the mouse or through ATM.

Technology has changed the way we make payments with electronic payment mode preferred by customers nowadays.  Electronic payment mode via National Electronic Funds Transfer or NEFT as it is popularly known can be used to make payment to Public Provident Fund (PPF).

Using NEFT to invest in PPF

We are used to investing in PPFs by going to the bank or post office, filling up the challan and depositing the cheque or cash as the case may be.  With the advent of NEFT, one can remit the money to PPF account at a click of mouse.  No more need to go to bank branch.  It is not necessary that one should have the savings / current and PPF account in the same bank.  One can transfer money even if both the accounts are in different banks.  However, this facility can only be availed by those having PPF account in bank and not in post office.

 

Personal Experience: 'SIP in PPF'

I am using this facility for my PPF account in State Bank of India and I am sure similar facility should be available for investors having PPF account in other banks.  I use the NEFT facility provided by ICICI bank, where my savings account is, to transfer money in SBI PPF account.

Last year, I invested a lump sum amount at the end of the year via NEFT.  This year to ensure that I invest regularly, I created standing instructions to transfer a fixed amount every month at a fixed date to the PPF account.  In other words, I created a SIP in PPF to ensure timely investment.  By providing standing instruction for the entire year, I have taken care of my full year’s PPF investment in just few minutes and clicks!

In PPF, interest is calculated on the lowest balance between the close of the fifth day and the end of the month.  Hence my standing instructions are for crediting the PPF account on the very first day of the month.  One can opt for any date between 1st to 4th to ensure maximum interest benefit.

This is a great way of investment in PPF and sets oneself free from the hassle of remembering the amount and date of investment in PPF account.

          Also read – Are you aware about the unique features of PPF?

However, keep the following important points in mind:

1.   This facility is available only for investors having PPF account in banks and not for those having it in post office.

2.   One can make maximum 12 investments in PPF account in a financial year with an overall limit of Rs. 1,00,000.  Ensure that you do not breach this.

3.   It is advisable to check the PPF account every month for the first couple of months to ensure credit is happening properly.

How do you invest in PPF?  Have you ever invested via NEFT facility?  What are your views on ‘SIP in PPF’?

PS:  This post was inspired by Monika Halan's tweet on PPF and my response to it.