PUBLIC PROVIDENT FUND ACCOUNT (PPF) 1968

It is statutory scheme of the Central Government framed under PPF Act 1968.
Accepting subscriptions from the investors by branches is Government Business
which helps the bank to earn non-interest income..

The PPF a/cs can be opened only by the authorised branches.

The salient features of the Scheme are as follows:

WHO CAN OPEN A/C-
1. An individual person,
2. A guardian on behalf of the minor,
( No joint a/c is allowed under the scheme )
Opening of new PPF accounts / extensions of existing PPF accounts in the name of
HUF and association of persons or a body of individual, has been discontinued w.e.f.
13.05.2005. However the existing accounts as on 12.05.2005 will continue till their
maturity.

IRREGULAR PPFA/C-
1. Only one a/c to be opened either with Post Office or with SBI Or Nationalised
Bank. The second a/c will be treated as Irregular and will not carry interest unless
merged in to one With the approval of GOI, MOF, Dept. of Economic Affairs .
2. A/c should not be opened in joint names or in the name of artificial / juridical
person. If such a/c is opened, it will be an irregular a/c.

MINIMUM & MAXIMUM SUBSCRIPTION Min.Rs.500.00 &
max.Rs.70,000.00 in a financial year. The subscription should be paid in multiple of
Rs.5.00.

PERIOD OF DEPOSIT- 15 years from the close of financial year in which a/c was
opened.

SUBSCRIPTION IN PPF A/C- It may be paid
1. In one lump sum or in convenient installment not more than 12 installments in an
year.
2. More than one installment in a month .
3. In cash or by a cheque.
In case of local cheque the date of tender of cheque will be treated as date of
deposit, provided it is honored on presentation.
For outstation cheque, the date of realisation will be taken as the date of
deposition of subscription.
Collection charges for outstation cheque will, however, be deducted from the
proceeds and the remaining amount will be credited to the PPF a/c as per
notification no.GSR 690 (E) dated 27.08.2003.


INTEREST ON PPF A/C-
1. The balance in the a/c will earn interest as per the rate fixed by GOI from time to
time. Presently, the interest rate is 8% which is effective from 01.03.2003.
2. Minimum balance in the a/c which is between close of 5
th
day and the last day of
month will be entitled for calculation of interest. ( Amount deposited on or before
5
th
of the month will be entitled for interest in the month)

3. Interest will be credited on yearly basis i.e. at the end of every financial year.


TAX BENEFITS PPF A/C -
1. Subscription deposited in the a/c qualifies for rebate under sec.88 of IT Act.
2. Interest earned in the a/c is exempt from the Income Tax & balance available in
the a/c will be exempt from Wealth Tax payments.

TRANSFER OF PPF A/C- At the request of the depositor-
The a/c can be transferred from one authorised branch to another authorised
branch.
It also can be transferred from one bank to another bank.

CLOSING OF A/C-
The a/c can be closed only on maturity i.e. after expiry of 15 years from the close
of financial year in which the initial subscription was made.
If the a/c was opened in the year 1983-84, the a/c can be closed on or after
01.04.1999 i.e. after expiry of 15 years from 01.04.1984.

OPTIONS AVAILABLE TO A/C HOLDER AFTER MATURITY The
depositor has to exercise either of the two options given below-
I. Extend the a/c for one or more blocks of five years without loss of any benefits by
submitting form H.
If the period of a/c is extended as above, the subscriber is eligible to make partial
withdrawals not exceeding one withdrawal every year, subject to withdrawal
amount not exceeding 60% of the balance standing in the a/c at the
commencement of the said period.
A/c holder can withdraw this amount( 60% ) in one year or more than one year as
per his requirement/s.
This limit of withdrawal will apply on every extension of block period.

II. Continue the a/c without depositing money.
1. Balance available in the a/c will continue to earn interest till the a/c is closed.
2. The a/c can be continued for any period of time after maturity without making
further deposit.
3. The balance in the a/c will continue to earn interest as admissible to PPF a/c.
4. The subscriber can make in each financial year withdrawals of any amount within
the balance available in the a/c.



LOAN ON PPF A/CS-
Subscriber can avail loan against the balance in the a/c from the third year of
opening of the a/c.
Subscriber can avail loan up to 25% of the balance including interest.
The loan can be repaid in one lump sum or in installment not exceeding 36
months.
Subsequent loan can be availed after repayment of earlier loan with interest.
Subsequent loan will be 25% of the balance to the credit at the end of second year
preceding the year in which the loan is applied for.
No loan can be availed after the end of 5
th
year from the end of the year in which
initial subscription was made.
Rate of interest on loan will be 1%.
( The PPF deposit minus loan outstanding will only get PPF interest during the
pendency of loan)


WITHDRAWAL FROM PPF A/C-
1. Subscriber can make one withdrawal every year.
2. First withdrawal can be made after expiry of five years from the end of the year
in which initial subscription was made ( i.e. from the 7
th
year).
3. The amount of withdrawal will be limited to 50% of the balance to the credit at
the end of the 4
th
year immediately preceding the year in which the amount of
withdrawal is to be made or at the end of the preceding year whichever is lower.
4. If the a/c is opened say on 01.10.2000 ( i.e. in financial year 2000-01 ) the first
withdrawal is allowed in 2006-07, which will be restricted to 50% of balance
( including interest applied so far ) as on 31.03.2003 or as on 31.03.2006 which
ever is lower.
5. The amount of withdrawal will be non-refundable.

NOMINATION-
Subscriber can make nomination in favour of one or more persons.
Nomination can be made in HUF a/c.
No nomination in case of a/c opened for minor.

DEATH OF A/C HOLDER-
1. In the event of death of a/c holder, balance can be paid to nominee or legal heir
even before completion of 15 years.
2. PPF a/c is can not be transferred in the name of another person.
3. In case of death of the a/c holder, nominee can not continue a/c of the deceased
person in his own name.
4. If the Karta dies, HUF a/c should not be closed. But the a/c should be continued
with new Karta appointed by the HUF.
5. If HUF is dissolved, the a/c should be continued and balance paid after maturity
with interest .




MORE ABOUT PPF A/CS-

1. Female subscriber can change her name on getting married.
2. PPF A/c can be opened through an authorised agent appointed under PPF agency
scheme.
3. The subscriber has to fill in prescribed form while opening the PPF a/c . ( Form
A)
4. Account should not be opened for NRI . However, if PPF a/c holder subsequently
becomes NRI, the PPF a/c can continue.
5. The branch can condone the default in payment of subscription in PPF a/c by
charging fee of Rs.50.00 for each year of default alongwith arrears of
subscriptions minimum Rs.500.00 per year.( w.e.f. 15.11.2002)
6. The a/c in which subscriptions are discontinued for any reason will be treated as
discontinued a/c. The a/c will be closed only after the date of maturity.
7. Loan or withdrawal facility can not be availed in discontinued a/cs . Such a/cs
will, however, earn interest till the maturity.
8. The a/c holder having discontinued a/c can not open another a/c in addition to
discontinued a/c. He must revive his a/c as mentioned in (4) above.
9. When the amount is withdrawn from minors a/c, the guardian should give a
certificate stating that Certified that the amount sought to be withdrawn is
required for the use of ( name of the minor ) who is alive and still minor.
10. Upon attaining majority, the minor should submit new a/c opening form and
operate the a/c.

11. After the maturity period, the subscriber should give his option of continuing the
a/c within one year. If he fails to give option and continue to make deposits in the
a/c, such a/c will be treated as irregular a/c and will not earn interest. Further these
deposits will not get rebate under I.T. Act unless it is regularised by GOI.

FOR BANKS-

COMMISSION AND REMUNERATION- Bank will earn
1. commission @ 11.80 paise per Rs.100.00 on PPF Turnover.
2. remuneration of Rs.25.00 per new a/c opened during the year. &
Rs.20.00 per year for old a/cs.


ACCOUNTING PROCEDURE-

1. The authorised branches are required to remit collection made under PPF scheme
on daily basis to the nodal branch i.e. Churchgate Branch by drawing a CN or CO
on that branch.
2. The consolidated amount will be remitted to government a/c by the Nodal Branch
within 3 days of deposit by the subscriber.
3. In case of delay, the penalty will have to be paid to GOI @ bank rate +2% on
delayed amount. All concerned in the transactions should avoid this delay.
4. What ever payments made by the branch to the depositor either by way of
withdrawal or loan that will be accounted for by drawing a DN or DO on
Churchgate branch.
5. Separate CN & DN will be drawn by the branch for each type of transactions such
as
CN- Subscription or Receipt of penalty for reviving the irregular a/c or
Repayment of loan and interest etc.
DN- Withdrawal of money or Disbursement of loan or Closure of a/c on maturity
etc.
6. Branch should send monthly statement in duplicate to Nodal Branch and the
duplicate thereof will be returned to remitting by the nodal branch.
7. Authorised Branches should also send a statement to ZO indicating subscription
received, amount withdrawn and interest credited to fund giving net collection
during the month.
8. ZO to compile the figures of all authorised branches under their control and send
the statement to Churchgate Branch with a copy to HO GOD.
9. Interest is credited to all a/cs on the last working day of the financial year and
advise the same to nodal branch.

COMPUTERISATION OF PPF A/CS-

Bank wants to computerise the branches having PPF a/cs. HO has placed order for
preparation of software to M/s Onward Technology Ltd. ZO IT will install the
software at the authorised branches and give compliance report to HO.
( The hand out is based on the latest Circular Letter no.2003-04 / 131 dated
03.02.2003)
























PUBLIC PROVIDENT FUND SCHEME, 1968:

RECKONING DATE OF DEPOSIT IN CASE OF CHEQUE PAYMENT

(a) In terms of Ministry of Finance letter No. F. 3(9)-PD/72 dated September 4, 1972, in
the case of Public Provident Fund Scheme, 1968 (PPF) "when a subscriber makes a
deposit by local cheque or demand draft, the date of tender of cheque or draft at the
Accounting Office is treated as date of deposit, provided the related cheque is
honoured on presentation for encashment." However, in case of all other Small
Savings Schemes of the Government of India (GoI), such as, Post Office Savings
Schemes (POSS), as also Senior Citizens Savings Scheme, 2004 (SCSS), if the
money is deposited in the account by means of a cheque (local or outstation), the
date of encashment of the cheque is treated as the date of deposit.

(b) In order to bring uniformity in the reckoning of the date of deposit in the PPF vis--
vis POSS and SCSS, the GoI, vide their letter F. No.7/7/2008/NS-II dated February
10, 2010, have decided that hereafter in modification of Ministry of Finance letter
No.F.3(9)-PD/72 dated September 4, 1972 "when a deposit is made in the PPF
account by means of a local cheque or demand draft by the subscriber, the date of
realization of the amount will be the date of deposit."

OPENING OF ACCOUNT OF A MINOR

(a) As per Rule 3 (1) of PPF Scheme, 1968, an individual may, on his own behalf or on
behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund.

(b) Further as clarified vide Ministry of Finance letter F.7/34/88/-NS II dated November
17, 1989, either father or mother can open a PPF account on behalf of his/her minor
child but not both.

Ref : Cir Letter No.2010-11/2 dated 05.04.2010
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OPENING OF MORE THAN ONE ACCOUNT UNDER PPF SCHEME 1968
IN CONTRAVENTION OF PPF SCHEME 1968.

In terms of Circular Letter No.2010-11/02 dated 05.04.2010 - Opening of an
account for Minor it was clarified that as per Rule 3(1) of the PPF Scheme 1968, an
individual may, on his own behalf or on behalf of minor, of whom he is the guardian,
subscribe to Public Provident Fund. It was also reiterated that in terms of Ministry of Finance
letter Ref. F.7/34/88-NS II dated November 17, 1989, either father or mother can open a PPF
account on behalf of his/her minor child, but not both.

2. However, Reserve Bank of India has advised that the Ministry of Finance has been
receiving a number of cases for regularization where more than one PPF account was opened,
in contravention of PPF Scheme 1968.

3. In view of above, Head Office has advised to meticulously comply with above
instructions.
Ref : Circular Letter No.2010-11/59 dated 09.06.2010

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