The Public Provident Fund (PPF) is one of India's most common long-term investment pool due to its higher returns, tax benefits and sovereign guarantee. PPF investment up to Rs 1.5 lakh per annum qualifies for tax benefit under Section 80C. PPF is the most preferred investment for the long-term investors across India because interest earned on PPF account and the maturity amount is exempt from income tax.
PPF comes with a lock-in period for 15-years and one can invest in this fund from a minimum of Rs.500 per annum. Many people fail to transfer the current PPF account at the stage of relocation and open a new PPF account with another branch of the bank or post office. A person can not open more than one PPF account in his / her name, as per PPF regulations. In case you have two PPF accounts the second would be regarded as invalid since it is not authorized under the regulations.
And because of its lock-in period of 15 years, you also can not close the second PPF account if any. In such a scenario, to keep it running, you must continue to pay the minimum deposit sum of Rs 500 per year by which you will not lose the entire corpus which has already been deposited in the account. It is suggested to deposit the minimum amount only in the second PPF account because it would not earn any interest though it is considered as invalid as per the guidelines of PPF. So the best thing to do is to grant authorization from the Department of Economic Affairs in order to merge your multiple PPF accounts.
How to transfer your PPF Account?
You can transfer your PPF account across bank branches and post offices in India. In case you have a PPF account with a bank of the public or private sector, you can make the deposit directly through the National Electronic Funds Transfer (NEFT). Or else you can also establish an ECS (electronic clearing system) mandate with your bank branch. Investors having a PPF account with a post office can not use these services. Most of the banks such as ICICI Bank, Bank of Baroda, State Bank of India, HDFC Bank, Axis Bank enable investors to make online deposits in the PPF account.
So it might be a smart move to transfer your PPF account from the post office to a bank to take advantage of the enhanced facilities available. If you are relocating to another city for a job, not happy with the services offered by your bank branch etc, in such cases, you can transfer your PPF account to another branch or bank. If you are willing to transfer your PPF account from one bank to another or from a post office to a bank then you need to submit a transfer application request in which you have to mention the complete address of the bank branch to which you are willing to transfer your account along with your original PPF passbook at your existing post-office/bank branch.
It is recommended to keep a photocopy of your PPF passbook before submitting your PPF passbook at your existing post-office or bank branch in order to hold a record of your past transactions and also check the acknowledgement of the transfer request. After submitting a transfer request your current post-office/branch will forward the transfer application form to the bank that is stated in your application form along with your existing PPF passbook, an approved copy of your account, nomination details, a cheque or demand draft with the outstanding balance, and signature proof.
You will get an update once your transfer request for the PPF account is issued with the documents from the new bank branch. You will need to file a fresh PPF account opening form and nomination specifics at the new bank branch. It takes up to one month for the completion of the PPF transfer process. However, if you wish to continue investing in PPF in the same bank and just need to switch the branch to a different area / city you are relocating to, the procedure takes up to seven working days for the completion. In order to change your bank branch, you need to submit an application form to your existing branch.
The new branch issues a new PPF passbook according to the transfer process, hence you need to check the correct outstanding balance in your PPF account. Moreover, you will be eligible for withdrawal and loan facilities after transferring your account as per the PPF standards.