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.
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.
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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.
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.
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?
Dear Avishek,
Better with banks.
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?
Dear Ramya,
You are allowed to open only one account. Hence, you have no option but to increase in same PPF.
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.
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.
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.
Dear Sunita,
It is sad that you too have undergone with the same situation. Yes, if we not notice, then they play with our money.
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.
Dear Manvendra,
Thanks for sharing your experience.
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.
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.
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.
Dear Kalpesh,
Combined together (Your+Minor) accounts is Rs.1.5 lakh. However, you can play with rules. I have explained the same in a different post. Read the same "PPF Account for Minor and Wife – Rules, Tax Benefits and Tricks"
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.
Dear Mahalakshmi,
Better you open where they provide ease of managing the account ONLINE. Many banks now offer such a facility. Hence, concentrate on the facility of online than any other stuffs.
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
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.