Which bank will be best for me if I become NRI later for PPF

Q&A: Questions & Answers Personal Finance Q&A
1

Hi,

I am 23 years old, currently residing in India and am just in the beginning of my long term investment career. I have been considering opening my PPF account but there is some uncertainty of me moving overseas in the future. Due to the uncertainty of becoming an NRI, I have been having some queries.

  • When opening a PPF account, does the choice of bank or the provider of PPF really matter over the long term, especially if you become NRI later? I have been checking out SBI, ICICI Bank, HDFC. If there is any other in your opinion, please do recommend me.

Indian residents who later became NRI while having their PPF account in Indian banks, their experience will help me a lot. I would like to know:

  • After becoming NRI and having existing PPF, was it easy to manage through their bank?

  • Does the account management and online access was easy to use for them?

  • Any issues was faced with contributions, withdrawals or maturity?

  • KYC, documentation or nomination issues was there?

  • Was there ever need for transfer or change the bank handling the PPF?

  • Choosing the bank, does it make any difference?

If you were opening a PPF today and knew that you might become an NRI in the future, would you choose SBI, ICICI Bank, HDFC Bank or another provider?

I would appreciate if experienced people would share their knowledge and have gone through any of the above scenarios rather than general opinions.

2

As NRI you cannot open a new account but continue existing till maturity. You can manage though any bank-online preferred since this is a govt. managed scheme. For more details please refer to below

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3

Firstly, you should note that PPF is one of the safest low risk Government of India scheme, so it is safe irrespective of where you open the account. The interest rate, 15-year tenure, contribution limits, withdrawal rules and tax treatment do not change depending on the bank/post office you choose.

If you open the PPF while you were a resident Indian and subsequently become an NRI, the existing account can presently be continued until its original maturity. However, note that, once you become NRI, you cannot open a fresh PPF account. The other condition is NRIs are not allowed to extend their PPF post maturity. As NRI, you can continue making contributions (as per PPF limits, current Rs.500 to 1.5lakhs per FY)) until the maturity.

Does the choice between a bank or post office matter? What can differ quite a lot is convenience of managing the account, especially internet banking, NRI conversion support, documentation handling and how smoothly the branch deals with unusual requests. I would personally prefer large private banks such as ICICI/HDFC over PSU banks (Because, private banks are conveniently hi-tech to operate sitting overseas, especially NRI servicing option).

Below few Do’s before leaving the country. Make sure the PPF has:

  • PAN correctly recorded,
  • Aadhaar/KYC updated while you are resident,
  • Current mobile number and email,
  • Nomination registered,
  • Correct date of birth and address,
  • Internet/mobile banking activated,
  • Transaction rights enabled, and
  • The PPF visible under the same customer ID/CIF as your banking relationship wherever possible.

Below few additional Do’s before leaving the country. Make sure:

  • To notify the bank and complete whatever change-of-residential-status/FEMA KYC process,
  • As a NRI you can’t continue residential saving account. It needs to be converted to NRO account. All future PPF contributions will be made through your NRO account. Also, the NRI can authorize resident Indian/family member to operate your account by way of giving suitable Power of Attorney (POA). Your PPF maturity amount will be credited to NRO account.

You must also notify the bank, if there is any change in your status while you are NRI.

I hope the above information helps. However, whichever bank you choose, better double confirm the above points before opening the account.

On a separate note, I am curious to know. You are just 23, what’s forcing you to open PPF account that will be locked for 15 years? While I am not sure your goal, I hope you are aware that the current interest rate of PPF is just 7.1% (tax free).