Public Provident Fund

PPF, Public Provident Fund, is a favorite investment avenue, thanks to the tax free, risk free and a good rate of interest. Here are some of the frequently asked questions regarding Public Provident Fund.

1.. Who can open a PPF account ?

A resident Indian Individual can open a PPF account on his or her own behalf and / or on behalf of a minor of whom he / she is the guardian.

2.. Can a NRI open a new PPF account?

A NRI (Non Resident Indian) cannot open a PPF account. However if a resident who subsequently becomes an NRI during the currency of the maturity period prescribed under PPF can subscribe to his/her account till maturity but cannot extend the account.

3.. Who can not open a PPF account ?

a ) NRI as explained above.

b ) Grand parents cannot open a PPF account on behalf of their minor grand children. However, in case of death of both the father and the mother of a child, their grand parents can open a PPF account in the capacity of the guardians of the minor grand child.

c) A ‘HUF’ or an individual on behalf of  ‘Association of persons’ can not open a PPF account.

4.. Can I open more than one PPF account ?

No. Only one PPF account can be maintained by an individual, except for an account opened on behalf of a minor child.

5.. How can I apply for PPF account : 

PPF account can be opened with a post office or with a bank. To apply for the Provident Fund account, you will have to fill a PPF account opening form, and enclose the following documents as per the KYC norms :

a ) Copy of address proof such as passport, voter id, recent Electric bill etc.
b ) Copy of Photo identity proof such as PAN card, voter id card, Driving license, Passport etc.
c ) Passport size photograph (1 or 2 copies depending on the institution).

6.. What is the minimum amount required to open a PPF account ?

Minimum amount required to open a PPF account is Rs. 500. The subscription into an account can be made in a single lump sum or in installments not exceeding twelve in a financial year.

7.. What is the minimum and maximum amount allowed in a PPF account ? 

An individual on his own behalf and on behalf of a minor of whom he is the guardian can subscribe with a minimum of Rs. 500 and a maximum Rs. 1,00,000/- (at present)  in a financial year. The ceiling on deposits as provided for by the Central Government from time to time is both for individual self account and account(s) opened on behalf of minor(s) of whom he is the guardian, taken together.

8.. What happens if I fail to deposit any amount in my PPF account ?

When an investor fails to deposit the minimum amount required in any year, such account is treated as discontinued. Till the account is revived, he can not take any loan or make any partial withdrawal from such account. Also no other PPF account can be opened in addition to the discontinued account.

9.. Can I revive the discontinued PPF account ?

A PPF account, if discontinued for some reasons, can be revived by making a payment of  Rs. 50/- for each year of default, along with the arrears, ie. Rs. 500/- for each default year.

10.. Can a PPF account be transferred ? 

Transfer of a PPF account from the post office or bank “Account Office” where it is held, to another post office or other branch of the same bank, or other authorized banks, “Account Office”, can be done.

A PPF account is not transferable from one individual to another. Similarly, the nominee cannot continue the account of a deceased subscriber in his own name.

11. What is the procedure of transferring the PPF account ?

A transfer form, along with the written application for such transfer, needs to be made to the bank or post office where the individual has the PPF account. After verification, bank / post office issues a new passbook with the past credit shown as balance transfer.

12.. What is the maturity period of a PPF account ?

The period of a PPF account is 15 years from the end of the year in which the account was opened.

13.. Can a PPF account continue with deposits after maturity ? 

After the maturity of the PPF account, an individual can exercise an option to subscribe for a further block of 5 years by submitting an application before the end of first financial year after such maturity. Partial withdrawals in the block periods shall be limited to one per each financial year and can not exceed 60% of the balance outstanding at the commencement of the block period. On completion of the first block period, an individual may continue to subscribe for further such block periods.

14.. Can withdrawals be made from the PPF account ?

Withdrawals can be made from a PPF account any time after the expiry of five years from the end of the year in which the initial subscription was made. A subscriber may, if he so desires, apply with his pass book to the ‘Accounts Office’  for withdrawal an amount not exceeding 50% of the amount that stood to his credit at the end of the forth year immediately preceding the year of withdrawal or at the end of preceding year, whichever is lower, less the amount of loan, if any, drawn by him and which remains to be repaid.

15 .. How many withdrawals can be made from a PPF account ?

No more than one withdrawal is permissible during any one financial year.

16.. Can a withdrawal is allowed from a minor’s PPF account ? 

Withdrawals from a minor’s account can be made subject to guardian furnishing a certificate stating that  “the amount sought to be withdrawn is required for the use of the said minor who is alive and is still a minor.”

17.. Can a PPF account continue without deposits after maturity?

A subscriber can retain the PPF account after maturity without making any further deposits. The balance will continue to earn interest. The subscriber is allowed to make one withdrawal of any amount from the PPF account in each financial year.

18.. Can nomination be made in PPF account ?

Nomination of one or more persons can be made to receive the amount standing to the subscriber’s credit in case of death. However in the case of a minor’s account, no such nomination facility is available.

19.. Can there be a change in nominations ?

Yes, changes to previous nomination(s) are possible by applying a fresh nomination(s). Every nomination and every cancellation or variation must be registered in the ‘Accounts Office’ and shall be effective from the date of such registration, the particulars of which shall be entered in the pass book.

A minor can also be made a nominee. In such cases where nominee is a minor, the subscriber may appoint any person to receive the amount due under the account in the event of the death of the subscriber during the minority of such nominee.

20.. What happens if the subscriber or a nominee dies ?

If a subscriber to an account in respect of which a nomination is in force dies, the nominee(s) may make an application to the ‘Accounts Office’ together with proof of death. If any nominee is dead, the surviving nominee or nominees shall, in addition to the proof of death of the subscriber, also furnish proof of the death of the deceased nominee.

Where there is no nomination in force at the time of death of the subscriber, the amount standing to the credit of the deceased after making adjustment, if any, in respect of interest on loans taken by the subscriber, shall be repaid by the ‘Accounts Office’ to the legal heirs of the deceased on receipt of application in required format along with the letter of indemnity, an affidavit, a letter of disclaimer on affidavit, and a certified copy of certificate of death of such subscriber.

21. Can I take loan  from my PPF account ?

A subscriber can avail a loan on his PPF deposit any time after the expiry of one year from the end of the financial year in which the initial subscription was made but before the expiry of five years from the end of the financial year in which the initial subscription was made subject to the limit of sum not exceeding 25% of amount that stood to his credit at the end of the second year immediately preceding the year in which the loan is applied for.

22.. How can we repay the loan taken from a PPF account ?

The principal amount of the loan is to be repaid by the subscriber before the expiry of 36 months from the first day of the month following the month in which the loan is sanctioned. The repayment can be made in one lump sum or in monthly installments. After the principal amount of the loan is fully repaid, the subscriber shall pay the interest amount in not more than two monthly installments.

23.. What is the rate of interest charged on a loan taken in a PPF account ?

Rate of interest is calculated at 2% above on the principal amount for the period commencing from the first day of the month following the month in which the loan is availed up to the last day of the month in which the last installment of the loan is repaid.

24.. Can a female change her name in the PPF account after her marriage ?

In the event of her marriage, a female subscriber can submit to change her surname by submitting documentary evidence of the same.

25.. Can a NRI repatriate withdrawals from PPF account ?

NRIs can credit the withdrawal proceeds from PPF account into the NRO account. And can remit from the NRO account as per the maximum amount permissible during the given financial year. You would need to follow certain procedure, as stipulated by the RBI, for such repatriation which are applicable for that year.

26.. Can the PPF account be attached ?

Yes, the PPF account can be attached by the Income Tax and Estate Duty authorities. However, the PPF act only gives the account holder immunity against attachment under a decree / order of a court of law.

27.. How much is the interest in PPF account ?

Now the most important question on the rate of  interest in the PPF account. Currently the rate of interest on a PPF account is 8.8%. The rate of interest is notified by the Central Government in official gazette from time to time, and is calculated for calendar month on the lowest balance at credit of an account between the close of the fifth day and the end of the month and is credited to the account at the end of each year.