New PPF Rules From 1st October 2024: 3 Important Changes that PPF Account Holders Should be Aware of

The Department of Economic Affairs, Ministry of Finance, recently issued instructions for the regularization of irregular Public Provident Fund accounts formed through post offices in violation of small savings scheme regulations. Guidelines have been established for the regularization of PPF accounts opened in the names of minors, multiple PPF accounts, and NRI account extensions.

The ministry issued a circular outlining the process for regularizing irregularly opened accounts under various National Small Savings Schemes through post offices on August 21, 2024. The circular explains the new rules for regularising irregular PPF, Sukanya Samriddhi Yojana, and other small savings schemes, which will take effect on October 1, 2024.

According to the circular dated August 21, 2024, “It should be highlighted that the Ministry of Finance has the authority to regulate irregular small savings accounts. As a result, all cases involving irregular accounts shall be directed to this division for regularization by the Ministry of Finance.”

Rules for the regularization of irregular PPF accounts in 3 different cases are as follows:

Irregularity owing to several PPF Accounts

As long as the deposit does not exceed the appropriate yearly ceiling, the primary account will earn the scheme rate of interest. The primary account is one of the two accounts selected by the investor in any Post Office or agency bank, and the investor intends to keep the account after regularisation.

The balance in the second account will be combined with the first account, as long as the primary account remains below the applicable investment ceiling each year. After the merger, the primary account will continue to earn the existing scheme rate of interest. Any surplus balance in the second account will be repaid at a 0% interest rate.

Except for primary and secondary accounts, all other accounts will bear no interest from the day they are opened.

Irregularity in Extension of PPF account by NRI

Solely active NRI PPF accounts opened under the Public Provident Fund Scheme (PPF), 1968, where Form H did not specifically request the account holder’s residency status, will be granted a POSA rate of interest to the account holder (an Indian citizen who became an NRI during the currency of the account) until September 30, 2024. The aforementioned account would thereafter receive 0% interest.

Irregular PPF accounts opened under the name of a minor

Interest on Post Office Savings Accounts (POSAs) will be paid until the minor becomes eligible to create an account, which occurs when the individual reaches the age of 18. After that, the corresponding interest rate will be paid.

The maturity term for such accounts will be computed from the date the minor becomes an adult, which is the date the individual becomes eligible to open the account.