Many of us investing in PPF (Public Provident Fund). However, we are unaware of PPF Investment and Deposit Rules properly. In fact, many of the Bankers are unaware of the PPF rules. Here is the real-life horror story of a lady.
PPF Investment and Deposit Rules – Beware your Banks are unaware of it!
A few days back, a lady (She doesn’t want to disclose her name and city of stay) contacted me for her issue of PPF with SBI Bank. Her PPF details are as below.
Her father started a PPF in her name (he was a guardian) in 1977. He deposited a certain amount for a few years regularly. After that, he forgot to deposit and in fact, he forgot the details about the PPF account. This account matured on 1st April 1993. After that as the account holder not requested for closure or extension with the contributory option, the account was by default activated for the continues blocks of 5 years with an option NO CONTRIBUTION for the next 25 years.
This account finally matured on 1st April 2018. however, suddenly in the year 2018, this lady found the PPF details of her which her father started in 1977 in her name. She approached the bank during the 2018 FY to reactivate it. She completed the KYC process and reactivated the account with an option that extended for another block of 5 years with CONTRIBUTION.
Three points to note here for readers.
# If you do not close the account after 15 years, then you have two options to continue.
# The account will continue for a block of 5 years continuously BY DEFAULT for the block of each 5 years as long as the account holder request for account closure or extension with a contribution.
# If you opt for an extension of the account with the contribution, then you are allowed to extend it for the block 5 years as long as you wish.
Refer the detailed post on this at “PPF withdrawal rules & options after 15 years maturity”. The same is explained in the below image.
My reader opted for the third option and gave a request. Remember that you have to give such an extension request any time but before a one-year completion of account maturity.
Accordingly, SBI Bank allowed her to withdraw some portion (within a rule of 60% of the balance at maturity on 1st April 2018). She withdrew around 10% of the total balance in FY 2018-19 and also to make sure that the account is active, she deposited a certain amount.
In the meantime, she started to suffer health issues a few months back. Hence, for her emergency medical need again she approached a few days back for the withdrawal of some portion of her PPF balance (again within the specified 60% limit of what it was at the maturity in 2018).
To her surprise, SBI Bank suggested her to come in the FY 20120-21. Because she is not allowed to withdraw her balance in this FY.
After reading my blog, she approached me for help. I suggested a simple strategy for her as below.
Rather than arguing with the bank as many of these employees are illiterate or act as per their software suggests, give a request in writing and let them reply in writing. Accordingly, she wrote a letter and Bank Manager replied that she is not eligible to withdraw the balance for the current financial year.
But by now, she was confident of PPF rules after reading my blog and interacting with me over the phone. Hence, as a next level of complaining (Refer THIS SBI Grievance Redressal Policy), she went personally to meet the AGM/GM of Local Head Office. As she was in need of money urgently, she visited the Local Head Office personally.
After hearing her voice, AGM of Local Head Office called the Branch Manager where her PPF account is there. After a thorough discussion, they finally allowed her to withdraw the balance.
It took her around almost 15 days to struggle to withdraw her own money from the PPF account. This is the reality of how banks or bank employees treat you without bothering on updating their knowledge.
I hope this real-life story will suffice you to update your knowledge before you start investing in PPF or while investing in PPF.