Is It Mandatory for NRIs to Close Their PPF Account Before Maturity? Here's What You Should Know

The Public Provident Fund (PPF) is one of the most preferred long-term savings schemes in India, especially for retirement planning. With a current interest rate of 7.1%, it offers better returns than many fixed deposits. But a common question arises—what happens to your PPF account if you become an NRI (Non-Resident Indian)? Do you need to close it before maturity?

Here’s a detailed breakdown:

Can NRIs Open a New PPF Account?

No, NRIs are not allowed to open a new PPF account. The rules strictly prohibit non-resident Indians from starting a new PPF investment.

What If You Became an NRI After Opening a PPF Account?

If you opened a PPF account while you were a resident Indian, and later your status changed to NRI due to employment, business, or relocation, you are still allowed to continue your existing account until its maturity.

This continuation is permitted because the account was validly opened during your resident status. Many people who become NRIs continue investing in PPF because of its attractive interest rate and tax benefits.

PPF Maturity and Investment Tenure

The PPF account matures after 15 years. After that, you can withdraw the full amount. Until then, even if your status has changed to NRI, you're allowed to keep contributing.

Important Rule Change Effective October 1, 2024

The Indian government made significant updates to the PPF rules for NRIs, which came into effect on October 1, 2024:

• If an NRI continues to extend their PPF account beyond the 15-year maturity without informing their bank or post office, they will not receive interest after September 30, 2024.

• In such cases, the balance in the account will only earn interest equal to a regular savings account rate, which is currently 4%, rather than the 7.1% PPF rate.

• NRIs must notify the bank or post office about their change in residency status as soon as possible.

What Should You Do as an NRI?

• If you become an NRI after opening a PPF account, you are not required to close it before maturity.

• However, you must inform the institution where your PPF is held (bank/post office) about your change in residency status.

• After maturity (15 years), you can withdraw the full amount. But if your status changed to NRI during this period, you cannot extend the account further.

Should You Close It Early?

You have the option to close the account prematurely if you wish. However, there is no mandatory requirement to do so unless:

• You extended your account irregularly without informing about your NRI status.

• You are not receiving the full interest benefits.

Key Takeaways

• NRIs cannot open a new PPF account.

• If you become an NRI after opening a PPF account, you can continue it till 15-year maturity.

• Interest benefits stop if you extend your account beyond 15 years without disclosure.

• Informing your bank/post office about your residency change is mandatory to avoid lower interest rates.

• After maturity, you can withdraw the full amount with no penalty.

Conclusion:

Becoming an NRI does not automatically force you to close your PPF account. You can continue to enjoy the benefits of your existing account until maturity as long as you follow the updated rules and inform the concerned authorities about your change in residential status. This helps ensure you don’t lose out on the full interest benefit of this long-term savings scheme.