PPF Account: A Public Provident Fund (PPF) account is a secure and profitable option for investment. It not only provides tax benefits but also offers attractive interest rates. However, sometimes, for various reasons, people may not make regular deposits into their PPF account, which can lead to the account becoming inactive. This raises the question: Does the amount in an inactive PPF account still earn interest? In this article, we will explain how interest is earned on an inactive PPF account and how you can reactivate it.
Do Inactive PPF Accounts Earn Interest?
When a PPF account becomes inactive, the amount in it continues to earn interest. An inactive account is one in which the minimum required deposit for a financial year was not made, or the account has completed its 15-year maturity period and the account holder did not opt for an extension.
There are a few conditions for earning interest on an inactive account:
- Interest will continue to be credited until the account’s maturity (15-year period) is reached.
- If the account holder has not made any partial withdrawals, interest will keep accumulating.
- The interest rate on an inactive account is the same as the rate set by the government for the respective financial year.
Thus, even if your PPF account has become inactive, you will still earn interest on the balance. However, to fully benefit from this interest, you need to reactivate your account.
How to Reactivate an Inactive PPF Account
If you wish to make your inactive PPF account active again, you can follow these simple steps:
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Contact the Bank or Post Office
A PPF account is opened through a bank or post office where the account was originally created. To reactivate your account, visit that institution and submit an application form.
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Pay Any Pending Amount
If you did not deposit the minimum ₹500 required in a particular year, your account becomes inactive. To reactivate it, you’ll need to deposit the pending amount for the years you missed making a deposit.
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Pay the Penalty
For inactive accounts, there is a small penalty of ₹50 per year charged by the bank or post office. This fee must be paid to reactivate the account.
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Resume Regular Deposits
After reactivating your account, ensure you deposit at least ₹500 each financial year to keep the account active and continue earning interest. This will prevent the account from becoming inactive again.
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Complete Required Documentation
When reactivating the account, you may need to submit identification, address proof, and other necessary documents to the bank or post office.
Conclusion
Reactivating an inactive PPF account is a simple process, and doing it promptly allows you to continue earning interest. The biggest advantage of a PPF account is that it provides secure investment options along with tax benefits. Once reactivated, make sure to keep investing regularly to enjoy a good return by the time of maturity.
So, if your PPF account has become inactive, there is no need to worry. You can visit your bank or post office, reactivate it, and keep up with a solid savings plan for the future.
