The new PPF rules, starting from 1 October 2024, aim to make small savings schemes more organised. Whether you manage a PPF account for a minor, have more than one PPF account, or are an NRI with a PPF account, these changes will affect how you earn interest.
1. PPF Rules for Minors
If you have opened a PPF account for a minor, it will now earn 4% interest, which is the same as the Post Office Savings Account (POSA) rate, until the child turns 18. After the child turns 18, the account will earn the regular PPF interest rate, which is currently 7.1%. This change in interest rate will affect the total money earned on the account during the child’s younger years.
The account’s maturity period will be counted from when the child becomes 18. If the account becomes irregular (for example, by missing deposits), it will only earn the POSA rate of 4% until the child turns 10. After 18, the regular PPF interest rate will apply.
Also, only one PPF account can be opened for a minor. If there are multiple accounts, only the main account will earn interest. The others won’t earn any interest from the day they were opened.
What happens when the child turns 18?
Once the child is 18, the PPF account can be continued, and it will start earning interest at the standard PPF rate. The 15-year maturity period will start from their 18th birthday.
2. Rules for Having Multiple PPF Accounts
You can only have one PPF account and two Sukanya Samriddhi Yojana (SSY) accounts. If you have extra PPF accounts, they will be closed without paying any interest.
If you have more than one PPF account, you need to choose one main account to keep. This main account will continue earning interest at the normal rate. The balance from the second account will be added to the main one, but if the total deposit is over the yearly limit of Rs 1.5 lakh, the extra money will be returned without interest.
If you have a second PPF account, it will not earn any interest unless it was merged with the main account before 12 December 2019. After merging, both accounts will follow the government’s interest rules. If your total balance is under the yearly limit, the money from the second account can be combined with the main one.
If you have more than two PPF accounts, any extra accounts will not earn any interest at all. This rule aims to stop people from opening too many accounts but still allows them to earn interest on their main investment.
What should you do?
If you still have a second PPF account, either merge it with the main one or close it to avoid losing interest.
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3. Rules for NRIs (Non-Resident Indians)
After 1 October 2024, NRIs will no longer earn interest on their PPF accounts. However, they can still keep their account until it reaches its full 15-year term.
Extension Rules for NRIs:
NRIs cannot extend their PPF account beyond the first 15 years.
Interest Rate Change for NRIs:
From 30 September 2024, NRIs’ PPF accounts will only earn the lower POSA rate of 4%. If the account is extended after 15 years, no interest will be paid at all.
Important to Note:
For NRIs with accounts that have been extended beyond 15 years, the interest will drop to 4% until 30 September 2024. After that, no interest will be paid on these accounts. For minors with irregular accounts, the 4% rate will apply until they turn 18, at which point the 15-year term starts from their 18th birthday.