Can NRIs open a PPF Account? Know the rules, restrictions and closure options

Time of India

2 days ago

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Can an NRI open a PPF account?
Can a PPF account be continued if the account holder becomes an NRI?
Can I prematurely withdraw money from PPF account after becoming NRI?
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What will happen to the PPF account if it continues until maturity after the account holder becomes an NRI?
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Loan against their PPF account
The Public Provident Fund (PPF) is one of the most trusted long-term savings schemes in India. The PPF offers guaranteed returns, tax benefits, and government-backed security. While it is an attractive option for Indians residing in India looking to build wealth and save on taxes, non-resident Indians (NRIs) often wonder whether they too can benefit from this scheme.According to current rules, NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) cannot open a new PPF account. According to government regulations, only Indian residents are eligible to open a PPF account.According to the SBI FAQs on PPF, "A resident who subsequently becomes NRI during the currency of maturity period prescribed under the Public Provident Fund Scheme, may continue to subscribe to the fund till its maturity on a non-repatriation basis. However, these accounts cannot be extended further."This means that if a resident Indian becomes an NRI at a later date, then they can continue their PPF account till the maturity date. However, the PPF account cannot be extended after maturity.The rules for premature withdrawals are quite strict for resident Indians with a PPF account. Premature closure is permitted after five years of account opening completion under specific circumstances, but penalties apply.According to the ICICI Bank website, "As per the Public Provident Fund Scheme, 2019 issued by the Government of India, NRIs can prematurely close their PPF account only after five years from the account opening date."The bank further adds, "Once you change your residency status to an NRI and submit a copy of your passport, visa, or income tax return to your bank or post office where your PPF account is held, you can prematurely close your account if you wish to."Once the PPF account reaches maturity, it is mandatory to close the account of NRIs. This requires the NRI account holder to withdraw the funds. The entire maturity amount will be credited to your Non-Resident Ordinary (NRO) account."As per official guidelines, the matured funds are non-repatriable and must be processed via the NRO account" as per DCB Bank website.Yes. Non-resident Indians shall be eligible to be nominated as a nominee, subject to the condition that payment to such nominee/s shall be on a non-repatriation basis. This means that the money received by NRI nominee will be credited to the NRO account.The PPF interest rate for the July-September 2025 is 7.1% per annum. The Indian government reviews and may change interest rates on a quarterly basis. The interest rate, set quarterly by the Government of India, ensures steady returns, while the interest earned remains tax-free.NRIs can avail a loan against their PPF account from the third to the sixth financial year of opening the account. This means that if you apply for a loan during the fifth year of PPF holding, then the loan that can be availed will be a maximum of 25% of the closing PPF balance at the end of the third Financial Year (April-March).