Public Provident Fund – Premature Closure – Clarification issued by Govt
All Head of Circles/Regions
Addl. Director General, APS, New Delhi
Subject : Premature Closure of Public Provident Fund (PPF) account- clarifications.
SB Order No. 07/2017
F.No 32-01/2016-SB(Pt.)
Govt. of India
Ministry of Communication
Department of Posts
(F.S. Division)
Govt. of India
Ministry of Communication
Department of Posts
(F.S. Division)
Dak Bhawan, New Delhi-110001
Dated: 24.07.2017
To,Dated: 24.07.2017
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.
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.
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,