How to Close a PPF Account Prematurely? Know the New Government Process Step-by-Step

The Public Provident Fund (PPF) is a popular savings scheme among investors across the country due to its great returns and risk-free nature. Currently, PPF offers an interest rate of 7.10%. The lock-in period for a PPF account is 15 years, but during this time, the withdrawal options are limited. Additionally, premature closure of the account is not allowed. In this article, we will share all the details of the step-by-step process to close a PPF account, along with the new government guidelines.

Partial Withdrawal Allowed After 5 Years

PPF account holders can withdraw a part of their balance after completing 5 years from the date of account opening. The maximum withdrawal allowed is up to 50% of the balance at the end of the fourth financial year before the withdrawal.

Premature closure of a PPF account is allowed only in specific cases, such as medical emergencies, higher education expenses, or if the account holder becomes an NRI. However, a penalty of 1% of the interest earned is deducted in case of premature closure.

PPF Account Cannot Be Closed Before 5 Years

A PPF account cannot be closed before completing 5 years from the date of opening. To close the account after this period, the account holder must submit Form 5 along with the required documents at the bank or post office where the PPF account is held.

Step-by-Step Process to Close a PPF Account Before Maturity

1. Visit the bank or post office where your PPF account is maintained.
2. Fill out Form 5, which is the PPF account closure form.
3. Submit the required documents as per the reason for premature closure:
4. For medical emergencies: Provide medical reports and hospital bills.
5. For higher education: Submit the admission form and fee receipts.
6. For a change in residency status (NRI): Provide proof such as a visa and passport.
7. The bank or post office will verify your details and process the application.
8. If all information is correct, your PPF account will be closed.
9. The balance amount will be transferred to your linked savings account.
10. The closure process usually takes 7-10 days, depending on the bank or post office.

What Is a PPF?

The Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India. It encourages small investments while offering tax benefits and secure returns, making it a popular choice among investors.