What changed
Government decided that PPF HUF accounts which matured after May 13, 2005 but were closed before December 7, 2010 are eligible for PPF interest on retained deposits, provided the accounts were not extended and no further subscriptions were made. This follows an earlier amendment requiring closure of such accounts after 15 years.
What it means for you
Banks must now process interest payments for eligible PPF HUF accounts that were closed during the specified period. This may involve recalculating interest for affected accounts and ensuring compliance with the Government's directive. Lenders should update their systems and train staff to handle these cases.
What you must do
- Identify all PPF HUF accounts closed between May 13, 2005 and Dec 7, 2010 after maturity.
- Verify that these accounts were not extended and deposits were retained without further subscriptions.
- Calculate and pay interest at PPF rates for the period deposits were retained beyond maturity.
- Communicate the circular to all branches dealing with PPF schemes.
- Maintain records of interest payments for audit and compliance.
Who it affects
Banks handling PPF accounts (SBI, associate banks, public sector banks, IDBI, ICICI), PPF HUF account holders who closed accounts between May 13, 2005 and Dec 7, 2010, Government Accounts Departments of banks
Which PPF HUF accounts are eligible for interest under this clarification?
Accounts that matured after May 13, 2005 and were closed before December 7, 2010, provided they were not extended and deposits remained without further subscriptions.
What is the deadline for banks to implement this?
The circular was issued on June 17, 2011, and banks were expected to bring it to all branches immediately. No specific deadline is mentioned in the source.
Does this apply to PPF accounts opened after May 13, 2005?
No. Only HUF accounts opened before May 13, 2005 are covered, as opening of new PPF HUF accounts was restricted from that date.