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

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

RBI/2010-11/578

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

June 17, 2011

The Managing Director/ Chief General Manager

Government Accounts Department

Government Business Department/Head Office

State Bank of India/State Bank of Patiala/

State Bank of Bikaner & Jaipur/State Bank of Travancore/

State Bank of Hyderabad/State Bank of Mysore/

Allahabad Bank/Bank of Baroda/Bank of India/

Bank of Maharashtra/Canara Bank/Central Bank of India/

Corporation Bank/Dena Bank/Indian Bank/

Indian Overseas Bank/Punjab National Bank/

Syndicate Bank/UCO Bank/Union Bank of India/

United Bank of India/Vijaya Bank/IDBI Bank/

ICICI Bank

Dear Sir/Madam,

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

Copy to:

1. Director General, Department of Posts, M/o Communication & IT, Dak Bhawan, Sansad Marg, New Delhi.
2. The Director, National Savings Institute, 4th floor, CGO Complex, ‘A’ Block, Seminary Hills, Nagpur – 440 006 with request to circulate the aforesaid instructions to all concerned and to ensure availability on the website of N.S.I. also.
3. The Assistant Director (SB), FS Division, Department of Posts, M/o Communication & IT, Dak Bhawan, Sansad Marg, New Delhi for circulating the aforesaid instructions to all Post Offices operating PPF Schem

(M. A. Khan)

Under Secretary to the Govt. of India