PPF Account Closure: In case of premature PPF account closure, a penalty is levied in the form of a 1 per cent reduction in the applied interest for the period for which the account is held.
PPF Account Closure: The Public provident fund (PPF) is one of the popular government-backed savings schemes in the country. PPF has a maturity period of 15 years. However, under certain circumstances, one may also choose to withdraw funds from the PPF account before the account matures.
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Premature closure of the PPF account is allowed only after 5 financial years from the time a PPF account is opened. It is allowed only under these three grounds:
– Health: An account holder can withdraw money for self, spouse, dependent children or parent on the production of supporting documents from a competent medical authority
– Education: Withdrawal is allowed for the higher education of the account holder, the minor account holder on production of documents as well as fee bills in confirmation of admission in a recognized institute of education in India and abroad.
– Death of account holder: The nominee or legal heir is allowed to withdraw the amount in case of death of the account holder.
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In case of premature PPF account closure, a penalty is levied in the form of a 1 per cent reduction in the applied interest for the period for which the account is held.
For instance, if the PPF account holder has earned interest of 5 per cent per annum for five years on the PPF account, the interest for each year will be reduced to 4 per cent.
Steps to close a PPF account before maturity
For a premature closing request, PPF account holders will have to submit a duly filled Form C at the bank branch or post office where he/ she has the PPF account. The PPF will be terminated thereafter, the corpus will be credited to the bank account.
