The investor will have to provide a valid reason for the same which includes expenditure towards higher education or medical treatment.
The government has decided to allow investors to withdraw and close PPF (Public Provident Fund) accounts before the mandatory lock-in period of 15 years provided the investor has completed five years.
However, the individual will have to provide a valid reason for the same which includes expenditure towards higher education or medical treatment.
The Union Ministry of Finance, released a notification on Monday which says, “A subscriber shall be allowed premature closure of his account or account of a minor of whom he is the guardian on ground that amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children on production of supporting documents from competent medical authority,” the Finance Ministry said in a notification.”
The notification further said the allowance will be applicable to the requirement of higher education of the account holder or the minor account holder on production of documents and fee bills in confirmation of admission in a recognised institution in India or abroad.
Till now, PPF did not allow premature withdrawal except in case of deaths. Requests for premature closure and refund of deposits on grounds of genuine hardship were dealt with under Rule 13, which allowed the government to relax the provisions under the scheme.
The Ministry also said that in case of premature closure, the investor will receive a lower interest rate. “Premature closure shall be subject to deduction equivalent to one per cent less interest on the interest rates applicable from time to time payable on deposits held in the account from the date of opening till the date of such premature closure,” the notification stated.
The interest rates for PPF is current 8.1 per cent.
PPF is a savings scheme provided by the government that allows citizens to deposit up to Rs 1.5 lakh a year for a period of 15 years. It is considered a safe method of saving, as it cannot be otherwise broken prematurely and usually offers interest rates higher than regular fixed deposits.