Public Provident Fund: Failure to deposit the minimum amount into your PPF account during a financial year can lead to the account becoming inactive; this halts new investments and prevents you from reaping the full benefits of compound interest.
PPF Account Inactivity Rules: If you invest in the Public Provident Fund (PPF), are you aware that a minor oversight could lead to a significant loss? Many people assume that once a PPF account is opened, they can deposit money whenever they wish, but this is not entirely correct.
If you fail to deposit the prescribed minimum amount during a financial year, your PPF account may become inactive. Once inactive, you cannot deposit any new funds into the account. Consequently, your investment activity halts, and you miss out on the full benefits of compound interest.
Why does a PPF account become inactive?
The tenure of a PPF account is 15 years, and it currently earns an annual interest rate of 7.1%. According to the rules, depositing a minimum of ₹500 into the PPF account during each financial year is mandatory. Failure to make this deposit results in the account becoming inactive. While you continue to earn interest on the existing balance, you are barred from making new investments until the account is reactivated.
Who can open a PPF account?
Any Indian citizen can open a Public Provident Fund (PPF) account. In the case of a minor, parents or legal guardians can open the account on their behalf.
How to reactivate your PPF account
If your PPF account has become inactive or dormant, there is no need to panic; you can reactivate it.
First, visit the bank or post office where your PPF account is held.
Next, submit an application to reactivate the account. You must deposit a penalty of ₹50 for each year the account remained inactive, along with the application.
Additionally, you are required to make a minimum investment of ₹500 for the current financial year.
Once the necessary procedures are completed, your PPF account can be reactivated, and you can avail yourself of all its benefits just as before.
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