What changed
Government amendments effective May 13, 2005, restrict small savings scheme investments to individuals only. Any PPF accounts opened by juristic persons (like HUFs, trusts, provident funds) on or after that date are considered void ab initio and must be closed immediately with principal refunded but no interest paid.
What it means for you
Banks must identify and close any PPF accounts opened by non-individuals after May 13, 2005, without paying interest. Existing accounts opened before that date remain valid until maturity, but any extension of such accounts will follow the new restrictive rules. This tightens compliance and prevents misuse of PPF by entities.
What you must do
- Identify all PPF accounts opened by juristic persons (HUFs, trusts, etc.) on or after May 13, 2005, and close them immediately.
- Refund the deposit amount to the depositor without any interest for void accounts.
- Allow existing accounts opened before May 13, 2005, to continue normally, but apply new rules for any extension requests.
- Issue clear instructions to all designated branches operating the PPF Scheme to ensure strict compliance.
Who it affects
Banks operating PPF accounts (SBI, associate banks, and other listed public sector banks), Juristic persons (HUFs, trusts, provident funds) who opened PPF accounts on or after May 13, 2005, Individual PPF account holders with existing accounts
What happens to PPF accounts opened by HUFs or trusts after May 13, 2005?
They are considered void from the start. Banks must close them and refund the deposit without any interest.
Can existing PPF accounts of juristic persons continue?
Yes, accounts opened before May 13, 2005, can continue until maturity as per old rules. But any extension of such accounts will be subject to the new amendments.
Are joint accounts by individuals affected?
No, the restriction applies only to juristic persons. Individual accounts (single or joint) and guardian accounts for minors/unsound mind are not affected.