The Department of Posts issued a circular on October 18, 2021, detailing the process of merging multiple PPF accounts into a single one. PPF Account.
As per the circular of the Department of Posts, let us have a look at how multiple PPF accounts can be merged.
If the PPF deposit does not exceed the prescribed limit
An individual will have the option to maintain a PPF account of his choice, provided the amount deposited in both the accounts together is within the prescribed deposit limit (currently it is Rs 1.5 lakh per financial year). If the PPF accounts are in the same operating agency (suppose you have more than one PPF in different banks or two accounts in the post office), then the PPF account can be easily merged using the process of transfer .
However, it may happen that PPF accounts are opened with any bank and post office (i.e., different operating agencies), in such case, the PPF account holder has to submit a request for PPF account merger. Either with the bank or the post office where he intends to maintain the PPF account.
The merger request should be submitted along with a photocopy of the PPF passbook / account details. Once the request is submitted, the PPF account office will send the details to the other office where the PPF account is to be merged.
The office where the PPF account is to be maintained will calculate the annual deposits made by the account holder in all the PPF accounts. It should be noted that the annual deposit should not exceed the prescribed deposit limit declared by the Government. Once it is confirmed that the deposit has not breached the prescribed limit, the request for account closure and balance transfer will be forwarded to another office.
The date of opening of the retained account shall be reckoned as the actual date of opening of the PPF account. This date will be considered for calculation of maturity and for other purposes like loans, withdrawals etc. Further, the date of transfer/credit of balance in the PPF account maintained will be treated as the date of credit for the purpose of loan/withdrawal. e.t.c.
If PPF deposit exceeds the prescribed limit
There may be a situation where the amount deposited in multiple PPF accounts at the same time exceeds the prescribed limit. In such a situation, the excess amount that violates the prescribed deposit limit in PPF accounts will be refunded to the individual after the account is merged. This amount will be refunded without any Interest.
The PPF account office will adjust the interest before transferring the balance to the maintained PPF account. Here also, the date of opening of the maintained account will be considered as the date of actual opening for the PPF account. This date will be considered for calculation of maturity and other purposes like loans, withdrawals etc. Further, the date of transfer/credit of balance in the PPF account maintained will be treated as the date of credit for the purpose of loan/withdrawal etc. .
Here is an example of how two PPF accounts will be merged.
Suppose a person has two PPF accounts where one was opened on 4th April, 2018 and the other was opened on 4th April, 2020. For easy calculation, we have assumed interest rate at 7% and maximum sanctioned amount of Rs.1.5 lakh.