Centre allows premature closure of PPF account
NEW DELHI, JUNE 20:
In a significant move,
the Finance Ministry has allowed subscribers of the Public Provident Fund (PPF)
to prematurely close their accounts after a minimum of five years for reasons
such as higher education or expenditure towards medical treatment.
The Finance Ministry
has also retained the interest rates on all small saving products for the
second quarter of the fiscal.
On PPF, the Ministry,
in a notification, said, the subscribers can close the account if “the amount
is required for serious ailments or life threatening diseases of the
accountholder, spouse, dependent children or parents…or the amount is needed
for higher education of the account holder or the minor account holder.” It
further added that supporting documents and bills will have to be produced.
But such subscribers
will get one per cent interest less than other accounts. For instance, instead
of an interest of the current 8.1 per cent, a subscriber who chooses to
prematurely close his PPF account would earn interest of 7.1 per cent on the
deposit. At present, withdrawals from the PPF account are allowed after seven
years of opening the account. But it is only up to 50 per cent of the total
deposit till the end of the fourth year. The account matures after 15 years,
when full withdrawal is permitted.
Interest rate
“On the basis of the
decision of the government, interest rates for small savings schemes are to be
notified on quarterly basis,” said the Ministry on Monday.
The return on PPF is
maintained at 8.1 per cent in the July-September quarter, the same as that in
the quarter ending June 30, 2016.
Similarly, the interest
rate on the Kisan Vikas Patra has been maintained at 7.8 per cent for a
maturity of 110 months, while the return on the five-year National Savings
Certificate is 8.1 per cent. The government has moved to a quarterly reset of
interest rates on small savings beginning this fiscal. Under the new mechanism,
returns on these products are aligned with the market rates of the relevant
Government securities, in order to improve the monetary transmission of
interest rates by banks.
Source : http://www.thehindubusinessline.com
