Why You Must Deposit Money In PPF Accounts Before Or On 5th Of Every Month

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The interest on PPF account is calculated on the minimum balance in the account between the 5th day of the month and the last day of the month. If the investor is depositing money after 5th day of the month, then the investor will be losing out on interest income of that particular month. For example, assume that at the beginning of the month the investor has ₹10,000 in the PPF account and he deposits another ₹5,000 in the PPF account on 7th day of the month, then the investor will be getting interest on ₹10,000 not on ₹15, 000 as the minimum balance in the PPF account between the 5th day and the last day of the month is ₹10000. Investor is losing out on interest income on ₹5,000. Hence, it is advisable to deposit money in PPF account on or before 5th day of the month to earn interest for the month.

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Pradeeptha Sethi
Prof. Pradeepta Sethi holds a doctoral degree in Financial Management from National Institute of Financial Management, Faridabad. Prior to his FPM, Prof. Sethi has worked in the State Bank of India as Credit Analyst for close to four years. His research and teaching interests are in the areas of Financial Development, Banking Sector and Corporate Finance.