The Reserve Bank has directed banks to mandatorily close the Public Provident Fund,PPF, accounts of Hindu undivided families, HUFs, which have completed 15 years and refund the money by March 2011. The Apex bank has said that henceforth HUFs will not be allowed to keep their accounts functional for the extended period of five years after completion of 15 years. The directive comes after the finance ministry’s notification that all PPF accounts opened by HUFs which have completed 15 years should be closed.
PPF is a popular savings scheme which provides tax-free return of 8 per cent. The scheme is for a period of 15 years with an option for extension of five years.