PPF Account Closure: The Public provident fund (PPF) is one of the popular government-backed savings schemes in the country. PPF has a maturity period of 15 years. However, under certain circumstances, one may also choose to withdraw funds from the PPF account before the account matures.
Premature closure of the PPF account is allowed only after 5 financial years from the time a PPF account is opened. It is allowed only under these three grounds:
– Health: An account holder can withdraw money for self, spouse, dependent children or parent on the production of supporting documents from a competent medical authority
– Education: Withdrawal is allowed for the higher education of the account holder, the minor account holder on production of documents as well as fee bills in confirmation of admission in a recognized institute of education in India and abroad.
– Death of account holder: The nominee or legal heir is allowed to withdraw the amount in case of death of the account holder.
In case of premature PPF account closure, a penalty is levied in the form of a 1 per cent reduction in the applied interest for the period for which the account is held.
For instance, if the PPF account holder has earned interest of 5 per cent per annum for five years on the PPF account, the interest for each year will be reduced to 4 per cent.
Steps to close a PPF account before maturity
For a premature closing request, PPF account holders will have to submit a duly filled Form C at the bank branch or post office where he/ she has the PPF account. The PPF will be terminated thereafter, the corpus will be credited to the bank account.