In case you don’t pay at least the minimum deposit amount in any year of your PPF tenure, your account will get inactive. It’s easy to forget about a financial instrument if you have invested in varied opportunities. Not paying the deposit in any year can happen due to a lot of reasons, and as such reviving a dormant PPF account has been made easy by the authorities.
An inactive account will still earn you interests till maturity as per the terms, however there are some downsides to such accounts. For one, you cannot claim loans against your PPF account anymore, which might become a problem if you’re looking at liquidity in the near future. Also, premature withdrawal will not be allowed for you until you reinstate the account.
Reviving an inactive account
There are small penalties in reviving a dormant account. The process to reactivate an account involves:
- Submitting a written request at the post office or bank branch where the account is based.
- Pay the minimum yearly deposit amount of Rs.500 for each year the account has been inactive.
- Pay a fine of Rs.50 for each year the account has been inactive.
- Visit the branch of PPF account once more to complete the verification process.
On completing the formalities, your account will get activated at the earliest. You are also required to reactivate an account that has matured while being inactive by completing the process detailed above. The proceeds of the account will be blocked until the account gets reinstated.
Suppose you have completed the 10th year of your PPF tenure. You deposited Rs.500+ every year for the first 7 years and were not able to make deposits for any reason in the last 3 years. To revive the account, you will have to pay:
- Rs.500×3 = Rs.1,500 as arrears for each fiscal
- Rs.50×3 = Rs.150 as penalty for each fiscal
In addition, you will be required to make the minimum deposit of Rs.500 for the new fiscal, i.e. 11th year of the PPF tenure