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What is the rate of interest offered on PPF to NRI's?

Ashwin (AFP) (93 Points)

04 March 2011

Is the rate of interest on PPF account to NRI's same as for resident citizens, i.e. 8%? This is for those who become NRI's sebsequently after opening a PPF account when they are resident's

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3 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 05 March 2011

What about accounts that have already been opened while the person was a resident Indian?
Already opened accounts can be continued. As has been mentioned in these columns before, no one is born an NRI, rather people become NRIs when they go abroad for better career prospects. When an Indian Resident goes abroad, more often than not, he leaves a large part of his investments including property behind. These investments may include the abovementioned prohibited investments in terms of PPF, NSC, Post Office instruments etc.

A resident who subsequently becomes NRI during the currency of term of these investments may continue the same till maturity. This means, they cannot open a new account or extend the scheme beyond its maturity. However, an already existing investment may be continued. For those instruments that require periodic investments (PPF), the NRI may use either the NRE or the NRO as per his convenience. Using the NRO account is recommended.

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Ashwin (AFP) (93 Points)
Replied 05 March 2011

Usage of NRE/NRO for subsequent deposits into PPF is understood. I am not disputing anything that you said. The rules are clear, NRI's can invest 70k every year till maturity of PPF after which it has to be compulsarily closed.

My question was about interest rates on PPF account held by NRI's. If deposits into PPF is from foreign currency NRE account, will the interst still be 8% p.a.? I couldn't find any material which suggests otherwise. So am I wrong in assuming that NRI's get 8% on PPF?