Clarification on Premature Closure of Public Provident Fund (PPF) account

Clarification on Premature Closure of Public Provident Fund (PPF) account

Clarification on Premature Closure of Public Provident Fund (PPF) account ** SB Order No. 07/2017 ** F.No. 32-01/2016-SB(Pt.) ** Government of India, Ministry of Communication, Department of Posts (F.S. Division), Dak Bhawan, New Delhi – 110001 ** Dated 24.07.2017

premature-closur-of-ppf-account-clarification

SB Order No. 07/2017
 
F.No 32-01/2016-SB(Pt.)
Government of India
Ministry of Communication
Department of Posts
(F.S. Division)
Dak Bhawan, New Delhi-110001
Dated: 24.07.2017
To,
All Head of Circles/Regions
Addl. Director General, APS, New Delhi 

Subject : Premature Closure of Public Provident Fund (PPF) account-
clarifications. 
 
Sir/Madam, 
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.
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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
default 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-NS dated 07.07.2017:- 
(i) The requirement of payment of a fee of Rs. 50 for each year of default
along with arrear 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 for the purpose of closing the account prematurely.
Hence, the subscriber is not required to deposit either the fee of Rs. 50
for each year of default. or arrears of subscription for closing the
account prematurely; and 
(ii) If 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 completion 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.
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4. It is requested to circulate these changes to all concerned 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.
Yours Faithfully,
(P.L. Meena)
Assistant Director (SB-1)

Source:
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