RBI/2010-11/578
DGBA. CDD. No. H- 8842/15.02.001/2010-11

June 17, 2011

Public Provident Fund (PPF) Scheme -1968 - Clarification
Payment of interest in respect of PPF HUF accounts

Please refer to our Circular RBI/2010-11/344 DGBA.CDD.No.H-4311/15.02.001/ 2010-11 dated December 27, 2010, forwarding therewith a copy of Government of India Notification G.S.R.956 (E) dated December 7, 2010, on the above subject.

2. In this regard, Government of India has, vide their letter F.No.7/4/2008-NS.II dated June 1, 2011(copy enclosed), decided that interest at PPF rates would  be paid on those PPF (HUF) accounts, which had attained the maturity after May 13, 2005 but closed by the subscribers before December 07, 2010, subject to the conditions that the accounts had not been extended thereafter and the deposits were retained in such accounts without further subscriptions.

3. You may bring the contents of this circular to all your branches dealing with this scheme.

Yours faithfully

( P. S. Ranga Rao)
Assistant General  Manager
Encls: As above

F.No.7/4/2008-NS.II
Ministry of Finance
Department of Economic Affairs
(Budget Division)

New Delhi, the 1st June, 2011

The CGM (DGBA)
Reserve Bank of India
Department of Government & Bank Accounts
Central Office, Byculla Office Building
4th floor, Opposite Mumbai Central Railway Station
Byculla, Mumbai – 400 008

Sub: Payment of interest in respect of PPF (HUF) accounts

Sir,

I am directed to say that as per the provisions contained in Public Provident Fund (PPF) Scheme, 1968, prior to 13th May, 2005 accounts could be opened by individuals and on behalf of HUFs. With effect from 13th May, 2005 opening of PPF accounts has been restricted to “individuals” only.  In this regard, a clarification was issued by Finance Ministry vide letter No. F.2/8/2005-NS.II dated 20.05.2005 intimating that PPF accounts of HUF shall continue till maturity and deposits/withdrawals in/from these accounts shall be allowed to be made in accordance with the rules of the scheme.  However, any extension of existing accounts shall be subject to the amendment dated 13th May, 2005.

2.  As per Paragraph 9 (3) of PPF Scheme, 1968, a subscriber to the account, any time after the expiry of 15 years from the end of the year in which the initial subscription was made, if he so desires, can apply for withdrawal of the entire balance standing to his credit.  Further, as per proviso below Paragraph 9 (3), the subscriber may, if he so desires, make withdrawal of the amount standing to his credit from time to time in instalments not exceeding one in a year.

3.   An amendment has been made to PPF Scheme, 1968, vide this Ministry’s Notification No. G.S.R. 956 (E) dated 7th December, 2010.  A new Proviso below Sub Paragraph 3 of Paragraph 9 of PPF Scheme, 1968 has been inserted, according to which PPF accounts opened on behalf of HUFs prior to 13th May, 2005 shall be closed after expiry of 15 years from the end of the year in which initial subscription was made. In respect of those HUF accounts where the initial period of 15 years had already been completed prior to the issue of Notification dated 07.12.2010, such accounts were to be closed on 31st March, 2011.

4.  Some of the subscribers of PPF (HUF) accounts had closed the accounts on maturity or thereafter between 13th May, 2005 to 7th December 2010 (before the issue of the aforesaid amendment).  Some of such account holders, were not paid interest at PPF rates on the deposits retained beyond the maturity period (without further subscriptions). Those subscribers had been representing that interest at PPF rate may also be paid to them on the deposits that were retained in PPF accounts beyond maturity period.  The matter has been examined in this Ministry and it has been decided that interest at PPF rate would be paid on those PPF (HUF) accounts, which had attained the maturity after 13.05.2005 but closed by the subscribers before 07.12.2010, subject to the conditions that the accounts had not been extended thereafter and the deposits were retained in such accounts without further subscriptions.

5.  The above decision may be circulated to all concerned for compliance.

6.   This issues with the approval of Secretary (EA).

Yours faithfully

(M. A. Khan)
Under Secretary to the Govt. of India

 

Interest on PPF HUF accounts: payment directed when deposits were retained after maturity and accounts closed before scheme amendment. The Ministry directed that interest at PPF rates be paid on PPF (HUF) accounts that attained maturity after the restriction on new HUF accounts but were closed by subscribers before the Scheme amendment, provided those accounts were not extended and deposits were retained without further subscriptions; banks and administering branches must circulate and implement this clarification in line with the Scheme's maturity and withdrawal provisions.