Government may allow premature closure of PPF accounts – All you need to know

The bill proposes permitting depositor to close a PPF account before five years in exigencies.

New Delhi: The government has proposed to allow premature closure of Public Provident Fund (PPF) accounts and permit opening of small savings accounts in the name of minors.

The legislative changes proposed in the Finance Bill 2018 are aimed at adding flexibility in operation of the account under Small Savings Schemes (SSS). Government has said that the changes proposed are aimed at adding flexibility in the operations of under the Small Savings Schemes.

Here is all you need to know about the new amendment.

- All existing protections have been retained while consolidating the PPF Act under the proposed Government Savings Promotion Act.

- No existing benefits to depositors are proposed to be taken away through this process.

- Besides ensuring existing benefits, certain new benefits to the depositors have been proposed under the bill.

- Besides, benefits of premature closure of Small Savings Schemes would be introduced to deal with medical emergencies and higher education needs among others.

- Another benefit, investment in Small Savings Schemes can be made by Guardian on behalf of minor(s) under the provisions made in proposed bill.

- The bill also proposes permitting depositor to close a PPF account before five years in exigencies. At present, such accounts cannot be closed prematurely before completion of five financial years.

- The amendments proposed would also allow the government to put in place a mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings.

- No change in interest rate or tax policy on small savings scheme is being made through this amendment.

- Small Savings Schemes include Post Office Savings Account, National Savings Monthly Income (Account), National Savings Recurring Deposit, PPF and Sukanya Samriddhi Account.