Banks asked to close 15-yr old PPF a/c of HUFs

NEW DELHI: The Reserve Bank today directed banks to 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 directive to the banks follow a notification by the finance ministry that said that all PPF accounts opened by HUFs which have completed 15 years should be closed.

The HUFs henceforth will not be allowed keep their accounts functional for the extended period of five years after completion of 15 years.

The government had in 2005 barred the HUFs and association of persons from opening PPF accounts in 2005.

With regard to accounts opened prior to May 2005, the government notification said that all such accounts be to mandatorily closed on completion of 15 years.

PPF, a popular savings scheme, 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.

HUF comprises persons lineally descendant from a common ancestor and is head 'karta'.