Public Provident Fund: Important updates regarding Public Provident Fund (PPF) accounts, especially those held in the names of minors, instances involving multiple PPF accounts, and the extension of PPF accounts by Non-Resident Indians (NRIs), have been released by the Department of Economic Affairs, which is part of the Ministry of Finance. The National Small Savings (NSS) schemes run by post offices were impacted by these changes, which were officially announced in a circular dated August 21, 2024. The new regulations come into effect from October 1, 2024.
Revised Guidelines for Minor PPF Accounts
The Ministry of Finance is now in charge of regularising any irregular small savings accounts, according to the Ministry’s circular. The ministry must be notified of all such cases so that the proper action can be taken. In particular, until the minor turns 18 and is able to open an account in their own name, interest on irregular PPF accounts held in their name will be paid on Post Office Savings Accounts (POSAs). Additionally, these accounts’ maturity periods will be adjusted starting on the day the minor becomes an adult.
Handling of Multiple PPF Accounts
For cases involving multiple PPF accounts, the ministry has set clear guidelines. The primary account—the one selected by the investor for regularization—will continue to earn the scheme rate of interest, provided the total deposits stay within the allowed annual limit. The balance in the secondary account will be merged with the primary account, and any amount within the investment ceiling will also earn interest at the scheme rate. However, any excess balance in the secondary account will be returned to the investor without accruing any interest. Additionally, all other accounts beyond the primary and secondary ones will not earn any interest from the date of their opening.
Extension Rules for NRI PPF Accounts
For NRIs with active PPF accounts opened under the Public Provident Fund Scheme of 1968, a special provision has been made. If Form H, used for the extension of these accounts, did not ask for the account holder’s residency status, the account will earn the POSA rate of interest only until September 30, 2024. After this date, the interest rate on such accounts will drop to zero percent.
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