This post was originally published on 5 March 2018.
Non-Resident Indians (NRIs) who had invested in Public Provident Fund (PPF) can continue their accounts, for now, a new official announcement says.
According to the new office memorandum released by the Department of Economic Affairs (DEA) on Feb. 23, the earlier notification about the closure of PPF accounts has been provisionally removed.
“It has presently been decided to keep the related notification in abeyance till the additional order in this regard,” the office memorandum declared.
The earlier notification was issued on Oct. 3, 2017, by the Department of Economic Affairs(DEA).
The amendment to the Public Provident Fund Scheme, 1968, declared in the official gazette, “If a resident who opened an account under this scheme subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident.”
Interest will be compensated at the rate applicable to Post Office savings accounts till the date the PPF account is closed. The Post Office savings account fetch an interest rate of 4 percent, which is almost half of that for PPF at now.
For the PPF scheme, the period of maturity period is 15 years, but the same can be extended for further five years and so on for Indian citizens.
The new change does not apply to National Savings Certificates (NSCs) purchased when an individual was a resident (and subsequently becomes an NRI). These will continue to be ‘deemed closed’ and earn only the savings bank account interest, in accordance with the government’s previous notification.