Can one transfer a PPF account? Is it closing the earlier account and opening a new PPF account? How much time does it take to transfer the account? Does one loose interest when he transfers the PPF account? This article answers all such questions.
Why would one transfer the PPF account?
The need to transfer one’s PPF account occurs due to
- Change of city : Often it happens that we (or our parents) open the PPF account in place of residence. Then due to job opportunities (of self/spouse ) or marriage one may have to change cities . When we shift from a city to another we either open a new account or update address in our financial accounts like Bank Account,Credit Cards, Demat account.
- From Post office to Bank: Usually when we start an investment we often go by what our friends/relatives/or one who is suggesting it is doing. At times we often cannot think of technological advances. 10-12 years back netbanking was not so common so it did not matter whether you opened a PPF account in Post Office or Bank. Many did open PPF in Post Office. But now Banks offer the convenience of viewing Public Provident Fund (PPF) Account balance, transferring funds from linked savings account online in their Net Banking Account. Shifting PPF account from Post Office to SBI or any other bank (like ICICI Bank) will enable online money transfer to PPF account through net banking, which makes it really easy to deal with.
What is the process for transferring an existing Public Provident Fund (PPF) account from another bank/post office?
As per the PPF scheme of the Government, subscribers can transfer their PPF account from one authorised bank or Post office to another. There is no difference in process whether the existing PPF account is in bank or post office. Please note While transferring though one has to close an existing PPF account and open a new one, the PPF account will be considered as a continuing account and one should not loose out any interest. Process of transferring PPF account is as follows :
- Get the PPF passbook updated and make sure all the interest accrued till the date are duly credited.
- Approach the bank or the Post office where your current PPF account is held and makes an application for transfer of PPF account to the specific branch of the bank. For post office one needs to use the form SB 10(b) and for bank an application letter. The details of the account, including the names and addresses of the branch/bank/post office where it is held, as well as the location where the transfer is sought, needs to be mentioned in the application. Suggested format is given here.
- Once the application is processed, for example signature verified, the existing bank or Post office arranges to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature etc. to bank branch address provided by the customer, along with a cheque or DD for the outstanding balance in the PPF account.
- Once transfer in documents are received at bank branch one has specified, one has to submit
- Fresh PPF account opening form ( Form A)
- Original passbook as a new passbook is issued with the past credit in the account shown as a balance transfer.. .
- Fresh set of Know your customer (KYC) documents. The KYC documents are for the government and have to be submitted even if one has a account(savings etc) in that branch.
- One should nominate (Form E) if not done earlier or change the nomination (Form F)
On transfer, the PPF account is considered a continuing account, not a new one. But a new account number and a new passbook will be issued with the past credit in the account shown as a balance transfer.Before submission, take photocopy of your old PPF pass book. This will come handy for several purposes like claiming income tax deduction under 80C, keeping record of earlier transactions etc.
The entire process may take more than 2-3 weeks, it is advisable to check the status from your end by visiting to the post office or bank branch where it is to be transferred. It is better to have photocopies of documents and forms that you need to submit.
The transfer of PPF account from Post office to Bank comes under Rule 153, Chapter IV which is covered in Post Office Savings Bank Manual, Vol. I, Second Edition, (pg 154) . The image, from the document below shows the rule. Click on image to enlarge.
Do you loose interest on transferring PPF account ?
Simple answer is NO you do not loose interest on transferring PPF account. Now the explanation, PPF interest is calculated on monthly basis , but credited yearly . By year we mean the the financial year(FY) i.e 1 Apr to 31 Mar of next year. So if you have a PPF account, for FY 2013-14 i.e 1st Apr 2013 to 31 Mar 2014, the interest till 31st Mar 2014 should have been credited to your account by second week of Apr 2014. Interest is added at end of financial year not in the middle year.
From our article,Understanding Public Provident Fund, PPF interest is calculated monthly on the lowest balance between the end of the 5th day and last day of month, however the total interest in the year is added back to PPF only at the year-end. The calculations are shown in picture below. Article also has PPF rates over the year.
Note: For monthly calculation one needs to use monthly interest which is (interest Per annum /12), which in above example is 8.8%/12.
Now as per PPF Rules, the bank or the post office transferring the account will add interest up-to the preceding 31st March in the account before the it is transferred. The interest from 1st April onwards will be added by the transferee office after the close of the year. And once the PPF Account is transferred, at the end of the year, make sure that all the interest accrued so far are duly credited. There have been complaints of full interest not given due to transfer of PPF account.
Problems in transferring the PPF account
It takes time to transfer the account. Minimum time taken is two-three weeks.
Interest is not accounted for full year during transfer of PPF account. Quoting our reader Mr N.K.Rajagopalan who contacted us,through email, to make the others aware of the problem. We are thankful to him.
After going through your web site, I thought that by writing this letter to you ,I can bring to the attention of many persons regarding the error in calculation of interest by SBI. There is a serious system failure in calculating the interest for PPF interest of those persons whose accounts are transferred from one branch to another. This may be due to certain flaw in the soft ware or the human error in applying the soft ware.
When a person request for transfer his account to a new branch, the old branch sends a cheque for the amount which is the opening balance as on 1st April.to the new branch The new branch opens a new account by giving a new number, from the date they have received the cheque. even though the person has asked only to transfer the account .At the end of the financial year when the interest has to calculated, the interest is paid only from the date on which the new account has been opened by the branch. The intermediate period from 1st April to date on which the account transferred to the new branch is not taken in to account.
I am writing this to bring to the attention of all the PPF account holders in SBI, to check the interest credited in their account, especially if they have transferred the account from one branch to another.My personal experience is that there was a difference of ten thousand rupees in my account and twenty thousand in my daughter’s account.
It took nearly four months to transfer the account from New Delhi to Bangalore. After I made an online complaint , the balance interest was credited last year(2012-13) . But once again,they did not take this additional amount in to account while calculating the interest for financial year 2013-14. Even though it was a mistake on their part in not calculating the interest correctly, they calculated the interest for the amount only from the day they rectified the account.Once again I made on line complaint and got my additional interest credited in my account. For your information I am giving below the calculation which I did:
As on 31-3-2012 :
- Closing balance =Rs. 1,380,429
- Total interest for 2012-2013 as calculated=Rs. 127,344.
- But total interest credited by SBI for PPF = Rs 107,098
- Difference in the interest for 2012-2013=Rs. 20,246
As on 31-3-2013
- Closing balance =Rs. 1,607,773.42
- Total interest for 2013-2014 as calculated=Rs. 147,851.29
- But total interest credited = Rs 143,317.00
- Difference in the interest for 2013-2014=Rs. 4,534.29
- Total difference in closing balance as on 31-3-2014=Rs 24,779.74
What can one do if interest for PPF is not credited during transfer?
Complain in writing to the bank. Send emails, submit letters. Keep a record of the emails sent/letter submitted.
If it doesn’t work Options are :
- Write to the Banking Ombudsman
- File Right to Information (RTI)
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. There are 15 such offices across the country. A customer can complain to the Bank Ombudsman against the service deficiencies, including credit cards, ATM and internet banking. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one’s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank. For more information on Banking Ombudsman please checkout RBI’s FAQ on Banking Ombudsman
Right to Information (RTI)
All government institutions fall under the purview of the RTI. Under the provisions of the Act, any citizen may request information from a public authority (a body of Government or instrumentality of State) which is required to reply expeditiously or within thirty days. The Act also requires every public authority to computerise their records for wide dissemination and to proactively certain categories of information so that the citizens need minimum recourse to request for information formally. This law was passed by Parliament on 15 June 2005 and came fully into force on 13 October 2005 The procedure for filing an RTI is simple. You could file an application on any paper and send a fee of Rs 10 by money order. For more details on RTI please refer http://rti.gov.in/
Articles about Investing Organised
- Understanding Public Provident Fund, PPF
- Voluntary Provident Fund, Difference between EPF and PPF
- On Maturity of PPF account
- PPF Account for Minor and Self
- Choosing Tax Saving options : 80C and Others
- Clubbing of Income
We are thankful to our reader Mr N.K.Rajagopalan for his initiative in contacting us and making our readers aware of the interest problem in PPF.
Have you moved your PPF account from Post Office to a bank? Did you go through any extra procedure, or have any problems? Please Share your experiences, and problems you faced when you had to transfer PPF account from Post Office to Bank or from one Bank Branch to another. If you found the article useful please share it with atleast one person.