The Department of Posts issued a circular on October 18, 2021, giving details of the process of merging multiple PPF accounts into one single PPF account.
Here is a look at how one can merge multiple PPF accounts, as per the Department of Posts circular.
If PPF deposits does not exceed prescribed limit
An individual will have an option to retain the PPF account of his choice, provided deposits made in both the accounts taken together are within the prescribed deposit ceiling (currently it is Rs 1.5 lakh per financial year). If the PPF accounts are held in the same operating agency (say you have more than one PPF with different banks or two accounts with the post office), then the merger can be done easily by using the process of transfer of PPF account.
However, it may happen that PPF accounts have been opened with a bank and the post office as well (i.e., different operating agencies), then in such a case, the PPF account holder will be required to submit a request for merger of PPF account either with the bank or post office, where he/she intends to retain the PPF account.
The merger request must be submitted along with a photocopy of the PPF passbook/statement of account. Once the request has been submitted, then the PPF account office will send the details to the other office where the PPF account to be merged is held.
The office where the PPF account has to be retained will work out the annual deposits made by the account holder in all the PPF accounts. Do keep in mind that the annual deposits should not exceed the prescribed deposit limit declared by the government. Once it is confirmed that the deposits have not breach the prescribed limit, the request will be sent to the other office for closure of account and transfer of balance.
The date of opening of the retained account will be considered as the actual opening date of the PPF account. This date will be considered for the calculation of maturity and other purposes such as loans, withdrawals etc. Further, the date of transfer/credit of balance in the retained PPF account, shall be deemed as date of deposit for the purpose of loan/withdrawal etc.
If PPF deposits exceed prescribed limit
There may be a situation where the deposits made in the multiple PPF accounts together exceed the prescribed limit. In such a situation, the excess amount breaching the prescribed deposit limit in the PPF accounts will be refunded to the individual after the merger of the account. This amount will be refunded without any interest.
The PPF account office will adjust the interest before transferring the balance to the retained PPF account. Here also, the date of opening of the retained account will be considered as actual opening date for PPF account. This date will be considered for the calculation of maturity and other purposes such as loans, withdrawals etc. Further, date of transfer/credit of balance in the retained PPF account, shall be deemed as date of deposit for the purpose of loan/withdrawal etc.
Here is an example of how the merger of two PPF accounts will be worked out.
Suppose an individual has two PPF accounts where one was opened on April 4, 2018, and another one was opened on April 4, 2020. For easier calculation we have assumed interest rate at 7% and maximum amount allowed is Rs 1.5 lakh.