PPF Investment and Deposit Rules – Beware your Banks are unaware of it!

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.

PPF withdrawal rules

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.

48 Responses

  1. Good Morning, I had approached SBI recently stating that i wish to transfer my PPF account from their bank to another bank. The bank staff told me they will not entertain any request for transfer till May’23. Is it fair to say the least. I escalated on email to GM but no use. When i questioned the bank and asked them being quarter end now they do not want money leaving the branch they laughed if off saying why you want to transfer etc. Since the money belongs to me can they refuse to transfer do advise.

    1. Dear Andy,
      Just because their internal circular or software does not allow them or they are busy does not mean you can’t transfer. You have all rights to request for transfer and they are duty bound to accept it. Else, let them be given in writing. You can complain and knock the ombudsman too.

  2. Hi Basavaraj,
    Thank you for all the efforts and articles. I am new to your blog and enjoying reading many articles.
    impressive writings, I am addicted to reading it.

    I have a query that, I want to invest in ppf and after reading this article, I got mixed review.
    For new investors like me, where do you suggest to open PPF with?

  3. Hi Basavaraj,

    I hold a PPF account since 2008. I have been investing 50000 annually in this account.I would like to know if i can open another PPF account to invest more? Or in this account itself can i increase my yearly investment? If so how should i do?

  4. Sir I am a pensioner and I hv PPF acct for the last five years and each Yr I a. Depositing Rs 1.5 lakhs to get tax benefit. But I don’t know as to whether the SBI is crediting proper interest every year end. What is the percentage of interest we shd get Pl enlighten us.

    1. Dear Sharda,
      You can download the passbook or update the passbook with them and you will get to know the interest. Regarding the interest rate, it changes on quarterly basis. Hence, the best idea is to check the passbook.

  5. Thank you so much for sharing this article.I too have similar experience with SBI.I had opened PPF A/c in 1996,which matured in 2011.I extended it for 5 years and I again extended it for next 5 years.It will be maturing in 2021.In the month of August,2019,I deposited a cheque of ?50000/- to the credit of my PPF A/c and to my horror,I received a call from SBI asking to collect a banker’s cheque as the amount could not be credited to my A/c.When I visited the branch,the officials dealing PPF portfolio were totally igrorant about the rules and were not able to explain the reason behind the non acceptance/non credit to my a/c.They were giving very vague excuses and when I told them that I am also a bank official of another PSB,still they could not give any satisfactory answer.The branch incharge was also equally dumb.Then I told them to contact their head office to solve this problem and also told them that I can wait for a month otherwise I would lodge a complaint with their head office.The customer service if SBI is really very poor.When the bank’s working was manual,they had credited less interest in my PPF account twice,for which I had to fight with the bank to get correct amt of interest.Your elaborate article is really useful for a layman to know the details.

  6. This is actually true. I’ve had the same experience while opening of my PPF account. The bank employees and even the manager do not know how some of the things are done. They do not update their knowledge. When i went to the bank they said you can only open this through cheque. Then i went to another branch, there i opened with just rs. 1000 cash upfront.

  7. Thank you Basavaraj and appreciate the idea of sharing a live incident on PPF which is worth knowing for many of the users who uses it as their investment option. I have a question here on PPF. I happen to open one few years back..in order to keep it active, is it must that i should do a contribution during the first 15 years span without fail. What will happen if i missed to do for few years in between? Appreciate your time in answering my question.

    1. Dear Manjusha,
      Yes, you have to invest the minimum yearly contribution to make it active. If you not paid in between for few years, then the account turn inactive. However, after few years if you wish to reactivate, then you pay to pay past years minimum balance along with small amount of penalty and can reactivate it. It is easy process.

  8. Dear Basu, thanks for elaborate article and sharing the experience of dealing with PSU banks. In reply to one of the comment you mentioned that for minor PPF account with gaurdian the limit remains 1.5 lakh and not 3 lakhs. This limit restriction is for claiming IT rebate or strictly no deposit beyond 1.5 lakhs is allowed.

  9. Hi sir,
    I’m physically challenged. I would like to open a ppf account with my bank. Can I please get your valuable suggestions for me.

  10. Mr. Basavaraj seems like u have made an opinion about the bankers and the post office employees. Not all persona are alike,. I know many who go extra length to provide u d best services . Indeed u r still unaware of such good men. Plz get updated

    1. Dear XYZ,
      I am not pointing as ALL but definitely a MAJORITY. Because many of them are heartless. When you are providing the service, the priority should be how well you serve the customers, which they hardly care.

  11. As per my understanding, As per the guidlines, every year you will have to contribute minimum 500 rupees to keep account enable. In her case they were forget account details but her account was still active. Is it possible?

  12. Sir,
    I opened a PPF account in Post office on 09 Nov 2006, when I can withdraw money, I meant what can be dates to withdraw. And which Year would be the last year of deposit.

    Can I withdraw amount any year after 15 years e.g. 17 year?

    Whether I needed to submit any form if I continue

  13. All this also going on at SBI,Urban Estate, Phase I,Patiala Branch. Branch Manager is in capable to solve any problem regarding PPF and is not familiar with the rules governing PPF and customer is supposed to suffer.CBS of SBI is has also helpless in this regard.

  14. Thanks Basu for the eye opener….
    Yes indeed better to do all dealings in writing…..
    Good suggestion to a lady and a lesson to all of us

  15. Sir, my son is 9.5 yrs old. Recently i read an article on junior ppf a/c. I already have a ppf with sbi bank. Now i want to open one for my son , on his 10th birthday. Can i plz hv more dtls.

    1. Dear Suma,
      There is nothing called JUNIOR PPF Account. You can open PPF account in his name and you or your husband act like GUARDIAN for your kid account. But do remember that if you became a guardian of your kid’s account, then the maximum limit allowed to invest a year both in and your kid account is Rs.1.5 lakh only but not Rs.3 lakh.

  16. Thanks for sharing.
    I would like to share another incident, where you can share your views and by which others may also benefit.
    I transferred ppf account of my son from a post office to check Canara bank. As usual practice I deposited the contribution (Thru a hdfc bank cheque, as my son didn’t have savings account with Canara) for last year on the 2nd of April. While the cheque amount was debited from the bank on4th April. Canada bank credited it into ppf account only on 16th April this, lost interest for the month (& also on compound basis for future period)
    I took it up with the bank manager, he initially doesn’t want to accept and when I shown him passbook, he said you must have an sb account with us then this problem won’t arise and in this particular case, he can’t help, as the handling clerk either must not have got credit advice in time and since it has already been entered, as per their software they can’t adjust.
    Then I told him I have no other option but to write to their ombudsman for intervention.
    He said I won’t get any benefit.
    I again confronted him by saying for another ppf account of my daughter with same Canara bank a contribution thru hdfc bank cheque of same branch got credited in time.
    He suggested a compromising deal, according to which I open a savings account for my son in their branch and he would calculate interest for the month of April for the contribution and credit it in sb account and in Future we won’t have such problems….
    I haven’t opened an account yet as there was no need for multiple savings account
    For info and your views

  17. Sir , bank se post office achcha hai, maine SCSS account PNB mein mother ke liye khola tha, but quarterly interst bank 3-4 months late dete hai , wo apne paas rakhte hai… But post office mein auto credit ho jate hai saving account mein. Actually banks government schemes ki jagah chahte hain ki fd karwaye…. This is the reality of Government banks

      1. Yes you r right. But banks r unaware about ppf & SCSS rules… & 2nd point is : i have good relations with post office staff, because in past i work as an assistant with post office agent.. thanks Sir for reply my Query

  18. Rather than arguing with the bank as many of these employees are illiterate or act as per their software suggests -> Best set of lines in the whole of the article.

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