PPF account transfer is very much possible, but it is not as easy as transferring a saving bank account. However, there may be genuine reasons to transfer a PPF account. As the PPF account has many benefits, you should keep it active and transfer it whenever required. You can transfer your PPF account after some paperwork. You can transfer your PPF account whether it is in a post office or state bank of India. The PPF account transfer facility gives you this flexibility.
Why You May Need To Transfer A PPF Account
There may be many reasons for PPF account transfer. You would have changed the city and you don’t find the bank branch nearby. You want to shift a bank which gives you the online PPF account facility. You may want to shift the PPF account to the neighboring post office. Or you just don’t want to deal with a particular bank.
However, people know little about the PPF account transfer. Even many bank employees are also not aware of the PPF account transfer process. Don’t worry PPF rules clearly states the procedure of PPF account transfer.
Should You Really Transfer A PPF Account
As I said, PPF account transfer is possible but not very easy. Hence, do evaluate. Whether you really want to transfer the PPF account. Do consider some points before transferring the PPF account.
The post office may not give you the online transfer facility. But the employees know the PPF rules very well. Also, PPF loan or partial withdrawal through the post office is easier.
Positive And Negatives Of PPF Account In A Bank
PPF Account In PSU Banks
- The bank executive may decline to open a PPF account if you don’t have a savings account with them. It is against the PPF rules, but very common.
- Some banks are reluctant to conduct the PPF related transaction.
- You can view your PPF account online. Even you can transfer the fund to PPF account online.
- There are a few banks, which give the online facility to the PPF account.
PPF account In Private Banks
- Private banks do open a PPF account, but their employees know little about the PPF rules.
- In the private banks, you will not get the passbook until you insist.
- Private banks have very few authorized branches for PPF. Hence, the PPF business is conducted through the selected branches.
PPF account in SBI
State bank of India is the most friendly bank for a PPF account. The employees are well versed in PPF rules. It gives you the online facility if you have a savings account with the bank. You can transfer funds to the PPF account of SBI from any other bank.
PPF account in ICICI Bank
- You can easily view and transfer funds to the PPF account online.
- ICICI Bank rarely opens a PPF account of a non-customer. It is publicizing the PPF account online, but to open a PPF account through ICICI Bank, you must visit the ICICI Bank branch. Very few branches of ICICI bank are authorized for the PPF business.
- ICICI Bank has only one authorized branch, in whole Mumbai. Every application related to PPF goes to the Nariman point branch for the processing. It is time-consuming. You will not get the PPF passbook readily.
PPF Account with HDFC and Axis Bank
In spite of the second biggest private bank of India, HDFC bank does not open a PPF account.
Axis bank opens the PPF account. The facilities are similar to the ICICI Bank.
Steps To Transfer A PPF Account
The procedure of PPF account transfer is clearly mentioned in PPF act. Bank and post office must follow these rules. Read, what the PPF act says about the PPF account transfer.
On receipt of transfer application from the subscriber in form SB-10 duly amended in manuscript, the identity of the subscriber will be verified through his specimen signature on record in the Head Post Office. The balance at credit will be withdrawn and the account closed by the Postmaster through the ordinary application for withdrawal (SB-7) with suitable remarks regarding transfer of the account to the State Bank of India/its subsidiary in all relevant records. The balance at credit will be remitted by Cheque or Bank Draft if the transfer is to an outside station, along with a certified copy of the ledger and all other related original records like application for opening the account, specimen signature card, if any, and nomination in original. The cheque/draft will be drawn by designation and will indicate that it relates to PPF Account No……… The transaction will not be included in the debit transfer journal/advice of transfer like savings account since the transfer is by cash, but will be shown as withdrawal in the list of transaction.
On the basis of the above rules, PPF account transfer has these steps
Step 1: Ascertain the Bank branch
Your first step should be the ascertaining new post office or bank for the PPF account transfer. Before applying for PPF account transfer, you must check whether the desired bank branch gives PPF facility. Go to the bank or post office and intimate about the forthcoming PPF account transfer. It will help further.
Step 2: Apply For PPF Account Transfer
Now you need to visit the post office or bank. But before that, you must write an application for PF transfer. In the application, you must state the reason for the transfer, Your PPF account, the bank branch name, address and IFSC code. You should also sign the application.
Along with this application, the post office will give you an account transfer form to fill. In the form, you need to fill PPF A/C Number and Name of the Bank, Address of Branch, IFSC Code of the Bank BRANCH to which you want to transfer the PPF Account. You can download the account transfer form of the post office.
You are also required to give an ID proof copy. It may be PAN, Aadhaar, Voter ID, Driving license etc. Sign the copy of the ID proof. The PPF passbook must be attached with the application.
Documents Required To Initiate the PPF account Transfer
- Application in plain Paper
- Account transfer form
- ID proof (Preferably PAN)
- PPF Passbook
Step 3: Application Processing
The post or bank executive will verify your application and signature with their records. After the verification, it will forward the application to the back office to prepare a DD or cheque. The DD or cheque will be sent along with your application and documents to the bank branch where you want to transfer the account. This process may take almost 2 weeks.
Step 4: Visit The New Bank Branch
After the application reaches to the transferee bank branch. It may intimate you. Either, you can also inquire to the bank branch. After the application reaches to them, you should fill the forms and complete the KYC formalities. Again, you have to go through all the documentation of new PPF account. It means you have to fill the form, stick photographs, fill the KYC form and give an address proof and Identity proof. You also need the sign of two witnesses if the nominee is a minor.
Documents Required for PPF Account transfer
- PPF account opening form
- KYC form
- Customer relationship form (In some banks)
- 3 photographs
- Identity proof
- Address proof
Step 5: Get The Passbook
You will not get the passbook immediately. It will take another one week to issue the passbook. In the passbook, you will see the previous balance entry as the ‘balance transfer’. It would be a single entry. If you want the details of your previous transaction, it is better to keep copies of your previous passbook.
Interest Calculation After the transfer
Interest calculation of PPF account is a little tricky. The interest on PPF account is given monthly. But, it is added to your balance on 31st March. The compounding of interest happens at the end of every financial year.
Now, suppose, you have transferred the PPF account in the month of November. Since the transfer is happening before the 31st March, there would not be an entry of interest in your passbook. The bank will make the cheque of total balance without the interest for 8 months. While the new bank is supposed to add interest of only remaining 4 months. So, will you lose the interest for 8 months in this PPF transfer process? No, you will not lose the interest.
To overcome this confusion, the government has prescribed a rule of interest calculation in the case of PPF account transfer. Please read the exact wording of PPF act.
The bank or the head post office transferring the account will add the interest up to the preceding 31st March in the account before the account is transferred. The interest from 1st April onward will be added by the transferee office after the close of the year. [As per rule 8 of the scheme the interest in the account is to be credited only at the end of the each year and not in the middle of the year. If the interest is added in the middle of the 29 year at the time of transferring the account, it will result in addition of compound interest on the interest already added in that year. Further the amount of interest is to be debited to the MOF (DEA) by both the Accounts Offices and it will not make any difference to the transferee office to add the interest at the end of the year.]
The bank will add up the interest till 31st March of the preceding financial year, before transferring the account. It is the norm and there should not be any confusion. The confusion may happen at the transferee bank, as the balance will not remain in the bank for the full financial year. The ignorant clerk may insist to add the interest of the remaining period of financial year only. You should immediately correct him.
While the final bank must add the interest of the whole financial year. To add the interest the current bank must check the previous passbook.
Since the interest on PPF account is given by the government of India, neither of the banks will lose anything because of this system.
What If Bank Do Not Add Interest Before The Account Transfer
The bank employee or postmaster may not be aware of interest rule. Hence, they may not add the total interest after transferring the account. You tell him to rectify. But to avoid such situation you should start the transfer process in the month of April. You would lose very little if any discrepancy happens.
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