The main disadvantage of Public Provident Fund account is its liquidity and long lock in period. This scheme is for long term investors who dont bother about liquidity. If you invested in PPF, our money is stuck for years on end. It is not as easy as selling some shares or mutual fund units.
You can make a partial withdrawal only after five financial years are completed from the end of the year in which the initial subscription was made. So, in effect, it works out from the seventh year onwards.
The amount of withdrawal is limited to 50% of the balance in your account at the end of the fourth year immediately preceding the year in which the amount is to be withdrawn; or at the end of the preceding year, whichever is lower.
You can also take loan against PPF account from the third year of opening your account to the sixth year.
Another disadvantage of PPF account is the changing rate of interest. Over the years, the rate of interest in this scheme reduced to as low as 8.1% from as high as 17% per annum.