I have a Public Provident Fund (PPF) account with Punjab National Bank in Mumbai. I moved from Mumbai and wanted to transfer the account but I opened a PPF account with HDFC Bank with the intention of transferring it to the Union Bank account. After the PPF account with HDFC was opened, I was informed that an individual can hold only one PPF account. I requested HDFC to close it, after a year’s time, but they informed that PPF has a lock-in of 15 years and so it cannot be closed. How do I go about it?


A PPF account has a lock-in of 15 years. However, investors have the option of transferring the account. For ease of investors, PPF offers the facility for transfer of account from one branch to another or even from one bank to another bank. The process is also simple. In case of a bank transfer, an application needs to be submitted in the branch where the PPF account is already functional for transfer of account to the new branch. But do make sure you get the PPF passbook updated and ensure that it includes the last deposits made as well as the interest accrued in the account as instances have been heard where the depositor has claimed the interest has not been fully transferred and much follow up was required. So to avoid such hassle, it is good to get the passbook updated. Post submission, the authorities will verify the documents along with your signature and complete documents, including your account details and cheque/demand draft of your PPF account balance would be sent to the new branch where you plan to open the new account. In a way, the new account is an extension of your old account and when the documents are received by the new branch, they will start the process of opening the account. This will require a fresh set of documents to be submitted, including nomination and redoing your KYC (know your customer). Once the account gets opened, they will issue a new passbook with the opening balance being the transferred balance from the old branch. It is financially prudent for you to keep a copy of the old PPF passbook.

In your case, you have opened another PPF account before submission of request for transfer. This will be counted as second account which is not allowed and will be treated as invalid. However, now that the account is opened, it cannot be closed. So you can continue the same by depositing the minimum subscription. But this account being categorised as an irregular account, will not earn any interest. Another option you have is to write a letter to Under Secretary-NS Branch MOF (DEA), New Delhi, through the accounts office giving details of both the accounts and request for combining of both accounts. You can also start the process of transfer from PNB, Mumbai, to Union Bank of India.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com