How much money can parents deposit into a child's PPF account?

Parents can start saving in a Public Provident Fund (PPF) to prepare for major expenses such as their children's education and marriage. This government-backed scheme currently offers an annual interest rate of 7.1%, and it is possible to open an account in the name of a minor child.

Nowadays, parents are increasingly planning ahead by saving for their children's future needs—whether for education, marriage, or other requirements. In this context, the Public Provident Fund (PPF) serves as a viable option. It is a government-run small savings scheme that currently provides an annual interest rate of 7.1%.

Parents can open a PPF account on behalf of their minor child; however, there are specific rules that must be kept in mind when making investments.

Who can deposit money into a child's PPF account?

A PPF account for a minor can be opened by a parent or a legal guardian. This can be done by submitting an application at a bank or a post office. At the time of opening the account, the necessary KYC documents for both the child and the guardian may be required.

Once the child reaches the age of 18, they can submit the required documentation to the respective bank or post office to take over the operation of the account. The initial tenure of a PPF account is 15 years, which can subsequently be extended in blocks of five years, in accordance with the applicable rules.

How much can be deposited annually into a child's PPF account?

A maximum of ₹1.5 lakh can be deposited into a PPF account during a single financial year. It is important to note that this limit applies to the total investment made across both the parents' own PPF accounts and the minor child's account. Even if both the father and mother contribute to their child's PPF account, their combined total contribution for any given financial year cannot exceed ₹1.5 lakh. For example, if a father deposits ₹75,000 into a child's account and the mother also deposits ₹75,000, the total amount will be ₹1.5 lakh. However, if the parents deposit ₹1.5 lakh each—into their own accounts or the child's account—the total would reach ₹3 lakh, which exceeds the prescribed limit.

How much of a fund can be accumulated over 18 years?

If ₹1.5 lakh is deposited into a child's account every year, and the interest rate remains constant at 7.1% throughout the entire period, a fund of approximately ₹55.14 lakh can be accumulated over 18 years. This would consist of ₹27 lakh in principal (your deposits) and approximately ₹28.14 lakh in interest. Similarly, depositing ₹1 lakh annually could result in a fund of about ₹36.76 lakh, while depositing ₹50,000 annually could yield approximately ₹18.38 lakh.