Premature Closure of Public Provident Fund (PPF) account- clarifications.
SB ORDER NO:07/2017
Govt. of India
Ministry of Communication
Department of Posts
Dak Bhawah, New Delhi-l10001
All Head of Circles/Regions
Addl. Director General, APS, New Delhi
Subject : Premature Closure of Public Provident Fund (PPF) account- clarifications.
The undersigned is directed to say that vide memorandum dated June 18,2016 and subsequent corrigendum issued vide notification dated June 27, 2016, Govt. of India, Ministry of Finance,
Department of Economic Affairs (Budget Division) and SB order No.11/2016 dated 04.11.2016 has permitted premature closure of a PPF account after completion of five year on specified grounds. However, such premature closure of a PPF account is subject to the condition that the interest payable on a prematurely closed PPF account shall be at a rate which shall be lower by one percentage points that the rate applicable to the PPF scheme from time to time.
2. Ministry of Finance (DEA) (Budget Division) has been receiving reference from banks seeking clarification of the following points:
(1) Whether the requirement of payment of a fee of Rs. 50 for each year of defautt along with arrear subscription of Rs. 500 for each year for regularizing discontinued account prescribed in para 7(2) of the PPF Scheme, 1968 shall be applicable for premature closing a discontinued
PPF account: and
(2) Whether the reduction of one percentage point in interest rate on premature closure of a PPF account which has completed 15 years and has been extended under para 9(3A) of the PPF scheme, shall be applicable from the date of extension of the account or from the date of initial opening of the account.
3. The matter has been examined by Ministry of Finance (DEA) (Budget Division) and the points are clarified as under vide memorandum F. No.3/2/2014-NSdated 07.07.2017:-
(i) The requirement of payment of a fee of Rs. 50 for each year of default along with atrear subscription of Rs. 500 for each year. Prescribed under para 7(2) of the ppF Scheme is for regularizing a discontinued account and is not applicable forthe purpose of closing.the account prematurely. Hence, the subscriber is not required to deposit either the fee of Rs. S0 for each year of default, or arrears of subscription for closing the account prematurely; and
(ii) lf a PPF account that has already completed 15 years and has subsequently been extended under the provision of para 9(3A) of the PPF Scheme is closed prematurely before the completiori of the current 5 year block period, the reduction in interest rate by 1 percentage point
shall be applicable from the date of the commencement of the current 5 year block period and not from the date of initial opening of the account.
4. lt is requested to circulate these changes to all concered for information and necessary guidance. Same may also be placed on the notice board of all Post Offices in Public area.
5. This issue with the approval of Competent Authority.
Assistant Director (SB-1)