What changed
The Government of India amended Section 9(3) of the Public Provident Fund Scheme, 1968 via notification G.S.R. 956(E) dated December 7, 2010. A new proviso mandates that HUF accounts opened before May 13, 2005 must be closed after 15 years from the end of the year of initial subscription. For accounts where 15 years have already elapsed, closure must happen by March 31, 2011.
What it means for you
Banks operating PPF accounts must identify all HUF accounts opened before May 13, 2005 and ensure they are closed within the stipulated timeline. This affects account maturity and refund processing, requiring banks to adjust any outstanding loan interest before releasing the balance. Non-compliance could lead to regulatory issues.
What you must do
- Identify all HUF PPF accounts opened before May 13, 2005 and calculate their maturity dates based on the year of initial subscription.
- Close accounts that have already completed 15 years by March 31, 2011, and refund the entire balance after adjusting for any loan interest due.
- Display the notification on branch notice boards and inform all branches operating the PPF scheme about the amendment.
- Ensure proper documentation and adjustments for any loans taken by the HUF subscriber before closure.
Who it affects
Banks operating PPF accounts (including SBI, associate banks, nationalized banks, IDBI, ICICI), PPF subscribers who are Hindu Undivided Families (HUFs), Branch managers handling PPF operations
What is the deadline for closing HUF PPF accounts that have already completed 15 years?
Such accounts must be closed by March 31, 2011, as per the amendment.
Does this amendment apply to HUF accounts opened after May 13, 2005?
No, the new proviso specifically applies only to accounts opened on behalf of a Hindu Undivided Family prior to May 13, 2005.
What adjustments need to be made before refunding the balance?
Any interest due from the subscriber on loans taken against the PPF account must be adjusted before the refund is made.