Public Provident Fund Scheme, 1968 : (1) Clarification regarding reckoning of the date of deposit (2) Reiteration of instructions on opening of an account for a minor

Circular No. DGBA.CDD. H-7530/15.02.001/2009-10, dated 29-3-2010

1. Reckoning the date of deposit in case of cheque payment:

(a) As you are aware, in terms of Ministry of Finance letter No. F. 3(9)-PD/72 dated September 4, 1972, in the case of Public Provident Fund Scheme, 1968 (PPF) “when a subscriber makes a deposit by local cheque or demand draft, the date of tender of cheque or draft at the Accounting Office is treated as date of deposit, provided the related cheque is honoured on presentation for encashment.” However, in case of all other Small Savings Schemes of the Government of India (GoI), such as, Post Office Savings Schemes (POSS), as also Senior Citizens Savings Scheme, 2004 (SCSS), if the money is deposited in the account by means of a cheque (local or outstation),the date of encashment of the cheque is treated as the date of deposit.

(b) In order to bring uniformity in the reckoning of the date of deposit in the PPF vis-à-vis POSS and SCSS, the GoI, vide their letter F. No.7/7/2008/NS-II dated February 10, 2010, have decided that hereafter in modification of Ministry of Finance letter No.F.3(9)-PD/72 dated September 4, 1972 “when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit.”

(c) You may bring this to the notice of your branches undertaking PPF business and ensure that the same is also incorporated in the computerized system. The information should also be duly displayed at the branches for awareness of the customers.

2. Opening of an account for a minor:

(a) In view of complaints being received about non-opening of accounts for minor by some Agency banks, it is reiterated that as per Rule 3 (1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88/-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/her minor child but not both.

(b) You are advised to reiterate these instructions to your branches operating the PPF Scheme.

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  1. AsmitaW says:

    we have a PPF account on name of my son where my husband is guardian. Have few queries:

    1. Can i claim the deduction if my husband is not claiming that.
    2. Do i need to deposit to claim or if my husband is depositing still i can claim the deduction if he gives in writing that he is not claiming that amount.

  2. BL Suri says:

    I deposited Rs 70000 0n 30.03.2010 by chque drawn on local bank . the amount stand drawn on 5.04.2010 from my bank, but the post office put the date in my pass Book as 6.04.2010 as he said senior Pot Master to whom the Cheque are drawn take a day to pass on instruction about relisation of Cheque. As the amount stand collected on 5.04.2010, there is no tenable reasons not to record 5.04.2010. Please let me know how I can get set right.

  3. Rugram says:

    I am sorry I dont agree with what Mr.Vathsa says.
    What Mr.Vathsa has written represents the position till 31.3.2010. The amended notification has changed this rule.
    Para (b) of the amended Notification quoted above reads:
    “when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit.” (Till now, the date of tendering the cheque at the bank was considered to be the starting date for calculation of interest, irrespective of actual date of realisation.) Thus the amended notification would result in loss of interest (for one month) on a deposit, if the cheque is not realised on or before 5th of the month. This is unfair to depositors and that is why I had suggested that the date of deposit, for interest purposes, should be earlier of the date of realisation or 3 working days after actual date of tendering of the cheque at the bank. This should be fair to both the depositors and the Govt. Banks which delay collection of cheques beyond 3 working days would need to be penalised by the Govt.
    On the query of Luduwina, since no cheque is involved and cash is deposited on 5th of a month, this cash deposit should earn interest for the month of deposit and thereafter.
    Members of the public should take this up with the Govt., to protect their interest, through the Press/Small Savings Dept. of the Govt. and other organisations.

  4. AN says:

    The date of realisation of the cheque will be the date of deposit. But this does not take into account banking holidays.

    For FY 2010-11, a cheque can be deposited earliest on 3rd April, 1st & 2nd being holidays. This cheque if drawn on other than PPF a/c bank will not be cleared by 5th. This essentially means that the interest for April 2010 will be lost although the deposit was made on the earliest available time.

    Is there any remedy to such anomally?

  5. vathsa says:

    Dear Rugram,
    I think your interpretation is wrong. The date of depost if cheque itself is the date of credit to the PPF account provided the cheque is not dishonoured. Suppose I go and deposit a cheque on 3rd april. The entry in your PPF pass book should say it as 3rd april even if the cheque is cleared on 20th April. I think the circular clearly clarifies this.

  6. kkj says:

    As per instrument negotiable act, the moment depositer issuing the cheque he has to freeze the cheque amount and the date of presentation of the cheque be the date of deposit subject to that the cheque should not be dishonoured. Bank/post office are charging the interest from the date of issuance of the cheque and not from the date of crediting the amount in the depositors account. There should be uniformity.

  7. rugram says:

    There should have been a simultaneous provision that the credit should be given within say 3 working days after deposit of the cheque. There are innumerable cases where Banks/Post Ofices delay collection of cheques for days on end. Depositors would suffer loss of interest if a cheque is cleared late, since the current rule is that interest is payable on the deposit only if the credit is given on or before the 5th of a month. The amended notification needs to be further modified, to the effect that the credit date should be the actual date of clearance of cheque or 3 working days from the date of deposit, whichever is ealier. This would be fair to both depositors and the Bank/Post Office maintaining the account.

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