The Department of Economic Affairs under the Ministry of Finance has recently released guidelines to regularize irregular Public Provident Fund (PPF) accounts that were opened in violation of small savings schemes’ rules through post offices. These guidelines specifically address the regularization of PPF accounts opened for minors, multiple PPF accounts, and the extension of PPF accounts by Non-Resident Indians (NRIs).
On August 21, 2024, the ministry released a circular outlining the guidelines for processing cases of irregularly opened accounts under various National Small Savings Schemes through post offices. The new rules for regularizing irregular accounts, including those for Public Provident Fund (PPF), Sukanya Samriddhi Yojana, and other small savings schemes, will take effect from October 1, 2024.
According to the circular dated August 21, 2024, “lt needs to be noted that the power to regularise irregular small savings accounts are vested with the Ministry of Finance. Therefore, all cases pertaining to irregular accounts should be forwarded to this division for regularisation by the Ministry of Finance.”
Rules for regularization of irregular PPF accounts in 3 different cases are as follows:
Irregular PPF accounts opened under the name of a minor
Post Office Savings Account(POSA) interest will be paid for such irregular accounts until the individual who is minor becomes eligible for opening of account, that is, when the individual attains 18 years of age. Thereafter, the applicable interest rate will be paid.
Maturity period for such accounts will be calculated from the date the minor becomes an adult, that is, the date from which the individual becomes eligible to open the account.
Irregularity due to more than one PPF Account
The primary account will earn the scheme rate of interest as long as the deposit falls within the applicable annual ceiling. The primary account is one of the two accounts chosen by the investor in any Post Office or agency bank, and the investor prefers to keep the account after regularisation.
The balance in the second account will be merged with the first account, provided that the primary account remains under the applicable investment ceiling in each year. Following the merger, the primary account will continue to earn the current scheme rate of interest. Any excess balance in the second account will be repaid at a zero percent interest rate.
Note that except for the primary and second account, all other accounts will bear no interest starting from the day they are opened.
Irregularity relating to extension of PPF account by NRI
Only active NRI PPF accounts opened under the Public Provident Fund Scheme (PPF), 1968, where Form H did not specifically ask for the account holder’s residency status, shall be granted a POSA rate of interest to the account holder (Indian citizen who became an NRI during the currency of the of the account) until September 30, 2024. Thereafter, the above mentioned account would receive zero percent interest.