The government has recently revised the rules governing the Public Provident Fund (PPF).
These changes will affect PPF accounts opened in the name of minors, multiple PPF accounts, and accounts linked to Non-Resident Indians (NRIs).
The new regulations will be enforced starting October 1. Before diving into these changes, it’s essential to understand the basics of PPF.
It is a long-term investment scheme backed by the government, ensuring complete safety and offering attractive returns.
PPF accounts have a maturity period of 15 years.
Interest Rate Changes for Minor Accounts
Under the new rules, money deposited in a PPF account opened in the name of a minor will earn the same interest rate as a post office savings account until the minor turns 18.
Once the minor reaches adulthood, the standard PPF interest rate will apply.
The maturity period for these accounts will also start from the date the minor becomes an adult.
This update is particularly relevant as many PPF accounts are opened in minors’ names.
Zero Interest for NRI Accounts Without Residency Details
The government has issued new guidelines for NRI PPF accounts as well.
Currently, these accounts receive the post office savings account interest rate without requiring residency details.
However, from October 1, 2024, the interest rate for such accounts will drop to zero.
NRIs are advised to review their PPF accounts and consider seeking financial advice to understand the impact of this change.
Interest Rate Applicability for Multiple PPF Accounts
If an investor holds multiple PPF accounts, the PPF interest rate will apply only to the primary account.
This interest will be calculated based on the maximum annual investment allowed in the scheme.
Any excess amount deposited will be refunded with zero interest, and the balance from the secondary account will be transferred to the primary account.
These changes highlight the importance of understanding the new rules to maximize the benefits of investing in PPF.
