Opening PPF Account Dilemma With Banks

Those who have a PPF account in any Indian bank might have realized the difficulty of opening the same. Due to not having any advantage from PPF accounts, personnel from banks generally try to influence the customers to back from opening PPF. They are generally using the trick of comparing some of their products with PPF by saying advantage of their products and the disadvantages of PPF. I have found RD and FD are two products they are using to compare with classic PPF account.

In this context, this article intend to educate readers to have better idea on the wonder advantage of investing on PPF and foolishness of believing bank officials to invest on their products than PPF. It also intend to protect yourself from not falling to any canvasing methods using by bank officials to go with their products than PPF.

At the very first, understand PPF is the only classic debt instrument available in India in its kind and no one able to beat this product with more than facilities providing by PPF. If you had read my previous article, you might have knew some of the best parts of PPF.

I will start with my personal experience of opening PPF with a big bank branch in my city.

I went to bank about 15 times to open the PPF account and most of the time they are sending me back saying one or other reason.

When everything found fine from the bank perspective, the manager called me and started his advice on the advantages of their products. They have introduced me the recurring deposit against bank PPF as first. I have not convinced the same because of not received any answer to the following.

1. Recurring deposit required a fixed amount in each month in the particular date required to be there in the savings account to transfer to the recurring AC. PPF doesn't required this.

2. Recurring deposit doesn't have compounding interest where PPF has the same.

3. Recurring deposit doesn't have tax benefit but customer is liable to pay tax on interest accumulated. PPF is the only product in India with the word 'Tax' not attached to this both for source and interest.

4. Compare with 8% interest rate of PPF, how can an RD beat this with its 3.25% or 4.25% interest rate?

5. Where you are going to get loan against RD? and what is the possibility of withdraw money without losing the interest till that day?

When I have asked the above questions to the manager, he immediately have little water but till now no proper answer received. It is because, there is no answer for this. Very natural.

Secondly, they came with there fixed deposit schemes and tried to force me to for FD with more than 9% interest for long term. Below was my doubt on this:

1. No tax benefit for interest as PPF giving.

2. Systematic investment not possible. You have to pay full amount at the beginning to start FD. Not possible to add more money to the same FD whenever required later. With PPF we will never face such problems.

Above two are enough to trash the FD or RD against PPF account. So don't fell to the trap by bank personal. My best advice is to approach main post offices and open the PPF account their than banks. Banks are the one of the place I really hate to go, I always suggest to open a PPF with general post offices or selected branches. I am sure, with post office, you will never face problems that bank can give you all the time.

In case, you have convinced to RD or FD, still post offices are your best option than banks due to its high interest rates than what banks offering and relatively easy procedures.