Can I take a loan against my PPF account? What are the rules and how much loan can I take?

Yes. You can take a loan from the fund in case of need, you don’t have to wait till you become eligible for withdrawals from the account.
The PPF rulebook states it as follows:
“Notwithstanding the provisions of paragraph 9, any time after the expiry of one year from the end of the year in which the initial subscription was made but before expiry of five years from the end of the year in which the initial subscription was made, a subscriber may, he so desires, apply in Form D or as near thereto as possible, together with his pass book to the Accounts Office for obtaining loan…”
In simple terms, the following are the steps to see how much loan is at your disposal.
Say you opened your PPF account in August 2011.
The end of the financial year when the initial subscription was made is March 31st, 2012.
The expiry of one year from the end of that financial year makes it 31st March, 2013.
So from this date onwards, i.e. from 31st March 2013, until ‘before expiry of 5 years from the end of the year in which the initial subscription was made’ i.e. 5 years from 31st March, 2012, that brings us to 31st March, 2017, you are entitled to apply for a loan against your PPF balance.
How much loan you can take is defined as follows:
“… A subscriber may, he so desires, apply in Form D or as near thereto as possible, together with his pass book to the Accounts Office for obtaining loan consisting of a sum of whole rupees not exceeding twenty five percent of amount that stood to his credit to at the ends of the second year immediately preceding the year in which the loan is applied for.”
So, following the example given earlier, you are eligible to apply for a loan from 31st March, 2013 to 31st March, 2017. Suppose you apply for a loan in February 2015.
So the year of loan application is FY 14-15.
The second year preceding this year is 2012-13. Whatever the balance standing to your credit at the end of this FY 12-13, you can take a loan of up to 25% of this balance, rounded to the nearest whole rupee.
The loan must be repaid in a maximum of 36 EMIs.
You can take a second loan against your PPF account before the end of your sixth financial year, but your second loan can be taken only once your first loan is fully settled.
Remember to have loan exposure that is at least in line with general financial planning thumb rules.