Questions To Ask Before Opening A PPF Account

The Public Provident Fund, or PPF, is a government-backed small-saving scheme. Though started in 1968 with the objective of providing social security during retirement to workers in the unorganized sector and for self-employed individuals, it has become a very popular tax-saving instrument.

Questions To Ask Before Getting A PPF Account

Frequently Asked Questions related to Public Provident Fund (PPF) are as under:

1. Can I maintain more than a Public Provident Fund (PPF) account under my name?

Only one PPF account can be maintained by an Individual, except for an account that is opened on behalf of a minor.

2. What is the eligibility for investing under the Public Provident Fund (PPF) Scheme, 1968?

A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of minors or a person of unsound mind. Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a minor.

A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their minor Son or Daughter; however the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor.

Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of a minor grand-child; however, in case of death of both the Father and Mother, Grand-parents can open a Public Provident Fund (PPF) account as guardians of the Grand-child.

3. What is the minimum and maximum amount that can be invested under the Public Provident Fund (PPF) Scheme, 1968, in a financial year?

The minimum deposit amount is Rs. 500 per annum and the upper ceiling limit is Rs. 1,50,000 per annum.

4. What happens if I fail to deposit any amount in one or more Financial Years?

A penalty of Rs. 50 will be levied per year of default, if the customer doesn’t deposit the minimum deposit amount of Rs. 500 on the completion of the financial year.

5. What is the Interest earned in a Public Provident Fund (PPF) account?

The current rate of interest on the Public Provident Fund (PPF) is 7.9%, which is compounded annually .

6. When does a Public Provident Fund (PPF) account mature?

A Public Provident Fund (PPF) account gets matured after the completion of 15 years from the end of the year in which the account was opened.

7. Can I extend the tenure of a Public Provident Fund (PPF) investment beyond the Maturity Period?

A customer can extend the tenure of a Public Provident Fund (PPF) investment for a block period of 5 years beyond the maturity period by submitting Form 4 within one year from the date of maturity.

8. Can I terminate or close the Public Provident Fund (PPF) account before maturity?

No premature withdrawal is allowed for Public Provident Fund (PPF) accounts. Only in the case of the death of a customer, their nominee /legal heir can close the account by submitting the required documents as guided by the Ministry of Finance.

9. Can I withdraw funds from my Public Provident Fund (PPF) Account?

Customers can make one withdrawal every year, from the 7th financial year, of an amount that does not exceed 50% of the balance of the customer credit at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.

Facility of partial withdrawal under PPF Scheme shall be available to the account extended, subject to the condition that the total withdrawal during the block period of five years shall not exceed sixty per cent. of the balance at credit at the commencement of the block period.

Please note that the withdrawal, subject to the ceiling as specified above may be made either in a single or in yearly installments.

10. Can I avail of a Loan facility on my Public Provident Fund (PPF) investment?

Customers can avail the loan after completion of 2 year from the date of Initial subscription but before expiry of 5 years. Application must be filed in Form 2 to the accounts office and for the amount which is less than or equal to 25% of total amount of credit balance in your account at the end of 2nd year immediately preceding the year in which the loan is applied for.

11. What is the process for transferring my existing Public Provident Fund (PPF) account maintained with another bank/post office to Bank of Your Choice?

As per the PPF scheme of the Government, subscribers can transfer their PPF account from one authorized bank or Post office to another. In such a case, the PPF account will be considered as a continuing account. To enable customers to transfer their existing PPF accounts to the Bank of your choice, the following process must be followed.

The customer approaches the bank or the Post office where his current PPF account is held and makes an application for transfer of PPF account to another Bank’s branch.

12. Role of another Bank Branch in case of Public Provident Fund (PPF)

Once transfer in documents are received at another Bank branch, customers are required to submit a fresh PPF account opening form and Nomination form, along with their original passbook . Also customers are required to submit a fresh set of KYC documents.

Conclusion

Once the application is processed, the existing bank/Post office arrange to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature, etc. to another Bank branch address provided by the customer, along with a cheque/DD for the outstanding balance in the PPF account.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.