Public Provident Fund account will be closed, NSCs encashed if holder turns NRI

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NRIs are not allowed in instruments like the National Savings Certificates, Public Provident Fund, Monthly Income Schemes and other time deposits offered by the post office.

Amending rules on post office savings schemes like the National Savings Certificates (NSC) andPublic Provident Fund (PPF), the government has notified that such accounts would be closed prior to maturity in case of holders changing their personal status to become non-resident Indians(NRIs).

The amended rules were notified in the official gazette earlier this month.

The amendment to the PPF Scheme, 1968, says: "If a resident who opened an account under this scheme, subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes non-resident."

The interest payable would be up to the date of the account closure, it said.

A separate notification on NSCs said in case of a similar change of status of the certificate holder before the maturity period, "the certificate will be encashed, or deemed to be encashed on the day he becomes non-resident" and interest will be paid accordingly.

NRIs are not allowed in instruments like the National Savings Certificates, Public Provident Fund, Monthly Income Schemes and other time deposits offered by the post office.

Asked to comment in this regard, an investment consultant said that it is unclear why NRIs are not allowed to invest in post office schemes.

Last month, the government had retained the interest rate on Public Provident Fund for October-December unchanged at 7.8 per cent, in line with the rates for small savings schemes.

Source :  The Economic Times