Interest on Public Provident Fund (PPF) After Maturity: What Happens When No Extension is Requested?

Understanding the Basics of Public Provident Fund (PPF)

The Public Provident Fund (PPF) is one of the most preferred long-term risk-free investment options in India, backed by the government. With a current interest rate of 7.1%, it offers attractive returns for investors looking for a secure and stable investment avenue. PPF accounts are ideal for those seeking a steady growth in their savings over the long term.

What Happens at the End of the Initial Maturity Period?

The initial maturity period for a PPF account is 15 years. However, after this period, you have the flexibility to extend your account for multiple 5-year blocks without additional contributions. It's important to note that you can extend the account any number of times, but it must be renewed every 5 years.

Interest Subsequent to the Maturity Period

Once the 15-year period ends, you have the following options:

Withdraw the entire amount Extend the account without any further contributions Extend the account with regular contributions

These extensions are done in a block of 5 years, and the decision can be made by the account holder. If no specific instructions are given by the account holder, the account will be considered to be extended without any further contributions. In this case, the prevailing interest rate on the balance in the PPF account will apply, currently at 7.1% per annum.

What Happens if the Account Holder Does Not Submit Any Instructions?

When the maturity period ends, if you do not give any instructions to extend the account or withdraw the funds, the account will be automatically extended without any further contributions. However, it's important to note that the account will not accept any new contributions during this extended period. Nevertheless, the balance in the account will continue to earn the prevailing interest rate, which is currently 7.1% p.a.

Key Points to Remember

To summarize:

The initial maturity period for a PPF account is 15 years. After the maturity period, the account can be extended for an additional 5 years without contributing further, if no instructions are given. The account will automatically keep earning the prevailing interest rate, currently 7.1% p.a. Interest is added to the account on the last day of the financial year, i.e., 31st March. Before the initial 15-year period, you can inform the bank or post office for the extension of the account.

Further Considerations

Initial Maturity Period: 15 years are the initial period for a PPF account, after which further extensions can be made.

Interest Decision: The rate of interest is decided by the government and may vary each year.

Regular Subscriptions: You are required to make regular contributions to maintain the account. The minimum annual subscription is INR 500. Any lapses in subscription may result in fines.

Account Closure: You can only close a PPF account after 15 years or upon your death.

Interest Addition: The interest is added to the account on 1st April of every year, which makes the balance as seen in the passbook inclusive of the interest up to the end of the previous financial year.

Understanding these factors can help you make informed decisions about managing your PPF account effectively. If you have any further questions or need help, don't hesitate to consult with a financial advisor or the relevant government body.