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Are Your Money Safe in PPF ?

People are worried about the status of Public Provident Fund (PPF), after the announcement made by Finance Minister during Budget 2018 regarding repeal The Public Provident Fund Act, 1968 under Finance Bill, 2018. After the announcement there is a common fear among people whether PPF will be discontinued or what will be the safety of money deposited in PPF ?

In Finance Bill 2018-19, a provision has been made to repeal the Public Provident Fund Act, 1968. As a result, all small savings schemes including PPF will now be covered under the Government Savings Banks Act, 1873.

The schemes include Post Office Savings Account, National Savings Monthly Income (Account), National Savings Recurring Deposit, Sukanya Samridhhi Account, National Savings Time Deposit (1 year, 2 years, 3 years and 5 years, Senior Citizens’ Savings Scheme, Savings Certificates, Kisan Vikas Patra , National Savings Certificates (VIII Issue) and Public Provident Fund Scheme. 

The Finance Bill 2018 says about Public Provident Funds (PPF)

  • “All deposits made or accounts or certificates held under the repealed enactments shall be deemed to be deposits or holdings in the Savings Scheme made under the corresponding provisions of this (Government Savings Banks Act, 1873) Act.”
  • “The repeal shall not prejudicially affect the interest of depositors who, before the commencement of the Finance Act, 2018, made deposits or were issued certificates or made contribution to any scheme under the repealed enactments.”
  • “Anything done or any action taken or purported to have been done or taken, including any rule, notification, order or notice made or issued or any direction given under the repealed enactments shall be deemed to have been done or taken under the corresponding provisions of this (Government Savings Banks Act, 1873 ) Act.” 

Further, Finance bill makes it clear that the ongoing structure of the schemes will not change if the PPF Act is repealed.

What is the Fear ?

What is the biggest fear of the repealing the Public Provident Fund (PPF) ? Many experts say a big drawback of the repeal would be that a subscriber’s deposits in PPF account would be subjected to attachment by a court of law in case he was under any debt or liability which he could not repay otherwise.

Further, Bill said that the repeal shall not judicially affect the interest of depositors who made deposits or were issued certificates or made contribution to any scheme under the repealed enactments before the commencement of the Finance Act, 2018, the bill said.

The Government Savings Banks Act, 1873 does not provide any such protection. The Public Provident Act of 1968 provides the protection on PPF investment  from court decree & attachment order.

  1.  PPF currently enjoys the freedom from court attachment i.e., the balance to the credit of a subscriber in his account is not subject to attachment under any order or decree of a court in respect of any debt or other liability incurred by him.
  2. This provision may not exist after merging the PPF act with Finance Bill 2018.
  3. Hence, The deposits of investors in the PPF account before the commencement of the proposed amendment shall enjoy the current protection against attachment as is available.
  4. However, with respect to any deposits made by the investors in the PPF schemes after the proposed amendment is legislated, there seems to be currently no provision proposed for protection against attachment.
  5. There is no provision under the Government Savings Banks act 1873 with respect to protection from attachment against decree as was available under the PPF Act.

Inputs from ET

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