Category: PPF

PPF Account Premature Closure Conditions, Ruling as per manuals and Finacle Procedure – Department of Posts

1. Conditions of PPF Account premature Closure

(1). A subscriber shall be allowed premature closure of his/her account or the account of a minor of whom he/she is the guardian, on a written application to the Account Office, on any one of the following grounds: –

• The amount is required for the treatment of serious ailments or life-threatening disease to the account holder, spouse or dependent children or parents, on production of supporting documents and medical reports confirming such disease from treating competent medical authority;
• The amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bill in confirmation of admission in a recognized institute of higher education in India or abroad:
• On change of residency status of the account holder on production of copy of Passport and visa or income-tax return.

However, such premature closure shall be allowed only after the account has completed five financial years from the end of the end of the year in which the account was opened and such premature closure shall be subject to deduction of such amount which shall be equivalent to one percent less interest on the interest rates as applicable from time to time payable on the deposits held in the account from the date of opening of the account till the date of such premature closure.

(2). Procedure in Finacle for Premature Closure of PPF Account

For premature closure of PPF account, the following procedure shall be followed by CBS post offices: –

(A). If PPF account is opened or extended in Finacle: –

• The Counter PA shall obtain the document(s) prescribed in the above paragraphs, along with passbook & premature closure form (SB-7B) from the account holder(s)/guardian, as the case may be.
• The Counter PA shall invoke menu HINTTM; Select Function = M – Modify; Entity Type = A-Accounts; Entity ID = PPF Account number; Go; Interest Table Code = PFPMC; Start Date = Date of Opening or Date of Extension of the Account (That is, it should always be 1st April); End Date = 31-12-2099 and then click on Submit. The CPA will transfer the documents to the Supervisor / SPM for verification.
• The Supervisor shall invoke menu HINTTM; Select Function = V – Verify; Entity Type = A-Accounts; Entity ID = PPF Account number; Go. The supervisor shall verify the account number, date of the applicable PFPMC interest code and date and then click on Submit. Then Supervisor shall transfer the documents back to the CPA.
• After, modification of interest rate as PFPMC using HINTTM as explained above, Account should be closed using HCAAC with closure reason code as PFPMC.
• All the document(s) collected for premature closure of account shall be attached with the premature closure form and forwarded to SBCO along with other vouchers.

(B). If PPF account is a migrated one or transferred in from Bank

• The Counter PA shall obtain the document(s) prescribed in the above paragraphs, along with passbook & premature closure form (SB-7B) from the account holder(s)/guardian, as the case may be, in duplicate.
• In case the account stands in Sub Post Office or Branch Post Office, the Sub Postmaster shall verify the PPF account details in Finacle and other document(s).
• The SPM of the Post Office shall forward one copy of the premature closure form along with document(s) to its HPO, for adjustment of interest for pre-migration / pre-transfer period & Closure of account. One copy of the premature closure form shall be retained in a Guard File.
• After receipt of documents for premature closure form, Postmaster / APM (SB) of HO shall check the documents received for premature closure.
• If the documents are in order, the Postmaster / APM (SB) of HPO shall calculate the interest to be adjusted before migration / transfer in period and take approval from the Postmaster of HPO. (It shall be ensured that interest adjustment is to be done up to the month of migration of account – 1 day / date of transfer in – 1 day / Date of extension of Account – 1 day as the case may be.)
• Postmaster of HPO shall approve the Interest Adjustment and direct Supervisor / Incharge, SBCO to check the correctness of interest adjustment to be done and to make interest adjustment entry in respective PPF account through HIARM menu.
• Supervisor / In-charge, SBCO shall check interest calculation and post interest correction entry in the HIARM menu.
• On the subsequent working day, the account should be transferred to the HO without collecting any transfer fee. After transfer of account to HO, the Counter PA shall invoke menu HINTTM; Select Function = M – Modify; Entity Type = A-Accounts; Entity ID = PPF Account number; Go; Interest Table Code = PFPMC; Start Date = Date will be auto populated (either 1st day of the next month of migration or date of transfer in or date of extension as the case may be); End Date = 31-12-2099 and then click on Submit. The CPA will transfer the documents to the Supervisor / SPM for verification.
• The Supervisor shall invoke menu HINTTM; Select Function = V – Verify; Entity Type = A-Accounts; Entity ID = PPF Account number; Go. The supervisor shall verify the account number, date of the applicable PFPMC interest code and date and then click on Submit. Then Supervisor shall transfer the documents back to the CPA.
• After performing the above steps, the Counter PA shall close the account invoking HCAAC menu with closure reason code as PFPMC, and payment mode is either credit in account holder’s PO Savings Account or by Cheque and the Supervisor shall verify the same.
• The Counter PA shall write the details of cheque or the Savings Account Number as the case may be in the acknowledgement portion of the Account Premature Closure Form under the signature of the Supervisor/APM(SB). All the Document(s) related to premature closure shall be attached with the premature closure form and forwarded to SBCO along with other vouchers.
• If payment is made by Cheque, the Postmaster should send the cheque to the SO concerned, duly entered in SO Slip.
• On receipt of cheque, the SPM will hand over the cheque to the depositor after taking receipt on the duplicate copy of the Account Premature Closure Form retained by SO, the Account Premature Closure Form shall be sent to HPO duly invoiced in List of Documents, for onward transfer to SBCO. SBCO shall attach this Account Premature Closure Form with the first copy of the Account Premature Closure Form received from HO.

PPF Account Premature Closure – Important Notes

Note (i): The requirement of payment of a fee of Rs. 50/- for each year of default along with arrear subscription of Rs. 500 for each year. prescribed under relevant para of the PPF Scheme is for regularizing a discontinued account and is not applicable for the purpose of closing the account prematurely. Hence, the subscriber is not required to deposit either the fee of Rs. 50/- for each year of default or arrears of subscription for closing the account prematurely.

Note (ii): If a PPF account that has already completed 15 years and has subsequently been extended under the provision of relevant para of the PPF Scheme is closed prematurely before the completion of the current 5-year block period, the reduction in interest rate by 1 percentage point shall be applicable from the date of the commencement of the extended block period.