PPF & Sukanya Samriddhi Rules

Learn about the new guidelines for managing irregular PPF and Sukanya Samriddhi Yojana accounts, including changes for minors, multiple accounts, NRIs, and more.

How Irregular Accounts Will Be Handled?
What happened, and why?
Small saving schemes like PPF (Public Provident Fund) and Sukanya Samriddhi Yojana have been popular among investors due to their decent interest rates, tax benefits under the EEE (Exempt-Exempt-Exempt) model, and the backing of a sovereign guarantee. These long-term products offer tax-free returns, the power of compounding, and contribute effectively to achieving financial goals when combined with other market-linked instruments like mutual funds.
However, due to ignorance or the assumption that accounts opened across different post offices or bank branches are hard to track, investors sometimes end up with multiple accounts. As per the rules, an individual is allowed to have only one account in their name. Recently, the Ministry of Finance issued new guidelines to regularize irregular accounts opened in violation of the rules governing National Small Savings Schemes, such as PPF, Sukanya Samriddhi Yojana, and National Savings Scheme.
This article explains these new guidelines, helping you understand their impact on your finances and the steps you may need to take.

What are irregular accounts in small saving schemes?
Irregular accounts are those that have been opened in violation of the rules governing small savings schemes, typically when a depositor opens multiple accounts despite the rule allowing only one per individual. These additional accounts are classified as irregular and must be addressed according to the prescribed guidelines. The Ministry has identified some irregular accounts, including:

PPF accounts opened in the names of minors
Multiple PPF accounts held by the same individual
PPF accounts held by NRIs
Sukanya Samriddhi Accounts opened by grandparents

The new guidelines aim to regularize these accounts and provide clarity on how they will be treated moving forward.
Let’s take a closer look at these guidelines.

What impact will this notification have on current investors?
1. PPF for Minors
Current Rule:
There is no minimum age to open a PPF account. Minors can have an account under the guardianship of their parents. The maximum amount that can be invested in a PPF account per financial year is ₹1.5 lakh, including deposits made in both the self and minor accounts. Each individual or minor is allowed only one PPF account, whether at a post office or bank. More than one account is considered irregular. (Also Read: Mistakes to avoid while planning for children education)
New Guidelines:
The Guardian has to recognize which account he/she wants to keep as the primary/Regular account and others will be termed Irregular

Until the minor turns 18, irregular accounts will earn interest at the Post Office Savings Account (PoSA) rate.
After the minor turns 18, the normal PPF interest rate will apply,
The account maturity period will be calculated from the minor’s 18th birthday.

2. Multiple PPF Accounts
New Guidelines:

The depositor must declare which PPF account is primary and which is secondary.
The primary account will earn the regular PPF interest rate. The balance from the secondary account will be merged with the primary account, keeping within the annual deposit limit.
Any excess deposits will be refunded without interest.
Any accounts beyond the second will not earn any interest from the date they were opened.

3. PPF for NRIs
Current Rule:
NRIs cannot open new PPF accounts. However, accounts opened when the individual was a resident can continue until maturity. Once the 15-year tenure ends, NRIs are not allowed to extend the account further. The interest rate remains the same for NRIs, although the interest earned may be taxable in the country of residence. NRIs are also not permitted to make contributions after the account matures. (Read: How NRIs can take the best advantage of the rupee depreciation?)
New Guidelines:

If an NRI’s PPF account was opened under the old 1968 PPF rules (when residency status was not a requirement), and residency status was not updated later, it will earn PoSA interest until September 30, 2024. After that, no interest will be paid.

4. Sukanya Samriddhi Accounts (SSA)
There are no changes in the product structure as such. You can refer to this article for a detailed understanding of the product features. (Explore: Child Plans of Mutual funds – a Review)
New Guidelines:

If an SSA was opened by a grandparent (who is not the legal guardian), guardianship must be transferred to the natural or legal guardian.
If more than one SSA was opened in violation of the rules, the irregular accounts will be closed.

Also, note: All National Savings Scheme (NSS) accounts opened under the NSS-87 and NSS-92 schemes will stop earning interest after October 1, 2024.

Conclusion
If you or your family have a Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), or any other savings scheme under the National Savings Scheme (NSS), it’s important to review these new guidelines. The government is enforcing stricter rules for irregular accounts, and the consequences could include losing interest income after October 1, 2024, for certain accounts.
If you have even a slight doubt about the status of your small savings account, it’s wise to contact your post office or bank to confirm everything is in order. Take action now to avoid any complications later.
(Explore: How Setting Goals Can Transform Your Life: A Must-Read)