Public Provident Fund scheme: Looking for extension? Here are the rules you need to remember

My bank has refused extension for PPF account after 15 years: What are my rights?

My PPF account was opened in March 2007 with a public sector bank. After its maturity after 15 years, I forgot to apply for extension and continuance of the account due to genuine oversight. Recently, when I went to the bank to deposit subscription for the year 2022-2023 and 2023-2024 they refused to accept the subscription, pointing out that the account was not renewed on time and that I have to close it and open a fresh account. When I asked whether I can transfer the balance in matured account to the new account being opened I was told that this cannot be done and I can only invest maximum of Rs 1.50 lakh every year. 

What I would like to know is whether the bank has no power/authority to condone such genuine mistake, which is only technical in nature and allow the depositor to renew and continue the account? Are they not vested with some discretionary powers?  Are they right in refusing to accept my plea to condone the delay in renewal. Please advise.

Reply by Balwant Jain, a tax and investment expert

As per the paragraph 12 of the Public Provident Fund Scheme, 2019 the subscriber of a Public Provident Fund account can extend the account for a block of five years at a time by making the application for such extension before expiry of one year from the maturity of the account. The bank does not have any discretion on regularising the account if the option is not exercised by the end of the financial year in which the account matures.  Even if any deposit is made and accepted in such matured account after the due date of extension such account is treated as irregular and the deposits is required to be refunded without any interest. Please note that the balance in the account on the date of maturity continues to earn interest upto the end of the month prior to the month of closure.

Your account had matured on April 1, 2022. It appears that you have not contributed any amount for the FY 22-23. If you had contributed, the bank would have asked you to fill Form-4 for continuing the account for the block period of five years. In other words, you have neither filed Form-4 nor made any contribution for the year, therefore your account is treated as a without-contribution account. In the case of account extended without contribution, withdrawals of any amount can be affected in instalments, not exceeding one in a year. The balance will continue to earn interest till the amount is completely withdrawn.

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Once the account is continued without deposits for more than a year, the account holder shall not have the option again to continue the account with deposits. No new account can be opened if the old one is extended either with or without contributions. So either you can withdraw the full amount and open a new PPF account or you can continue the balance in this account as long as you wish.

(Views expressed by the investment expert are his/her own.)