PPF Account Discontinuation: EXPLAINED! How to recover Public Provident Fund account?

The Public Provident Fund (PPF) is a savings scheme offered by the central government. It was started with the aim to provide old age income security to self-employed individuals and workers from unorganised sectors. PPF is one of the best saving tools in India with low risk and a better interest rate. People working in the informal sector or unorganised sector, as well as unemployed, self-employed, can invest in PPF.  

Similarly, taxpayers can claim tax deductions of up to Rs 1,50,000 annually by investing in PPF. The minimum investment of Rs 500 should be made in a year. One cannot invest more than Rs 1,50,000 a year. The returns offered by PPF accounts are fixed and are backed by sovereign guarantees. The rate of interest currently stands at 7.1 per cent.

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However, one of the most common problems that the PPF account holders often face is the discontinuation of accounts. There have been situations where customers have found out that their PPF account has expired. Are you the one facing such a similar issue? Don’t worry, you can easily renew it through an application form. But before moving ahead, let’s understand the situations, in which your PPF account can expire.   

If a PPF account holder fails to contribute the minimum amount in any subsequent financial year, which is from April 1 to March 31, then the account is treated as discontinued. And with this, the account holder loses the withdrawal facility option.  Also, in such circumstances, the account holder can’t avail loans on its PPF money. 

The subscriber will get back his amount only after the expiry of the maturity period of 15 years, along with interest, which will continue to be added each year on the balance at a fixed rate by the government on a regular basis. This is despite the account gets discontinued.  

A discontinued account cannot be closed before the maturity date. However, if one wants to recuperate the account, it can be done any time before its maturity date. This can be done by submitting a written application for reviving the account at the bank or post office, where it was opened.   

On top of that a penalty of Rs 50 for each year of default, Rs 500 for each year as arrear payment, and a minimum of Rs 500 as subscription for the year in which the account is being revived is to be paid.   

The total deposit in a year shall be inclusive of deposits made in respect of years of default of previous financial years.