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.

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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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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).

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Thank you for sharing this. I had also come across similar information, but my main concern is more about the practical experience of managing an existing PPF after becoming an NRI.

If anyone here has actually held a PPF with ICICI Bank, HDFC Bank, SBI or Post Office and later became an NRI, I would especially like to know whether online access, contributions, KYC updates, withdrawals and maturity were easy to manage from overseas.

6

Thank you for the detailed explanation. The practical points about updating KYC, nomination, mobile number, email and residential status before moving overseas are particularly helpful.

Regarding your question about why I am considering PPF at 23, I am looking at it mainly as a safe, long term part of my overall financial plan rather than putting all my money into it. I am still trying to understand how much should go into PPF versus more flexible investments, especially because I may move overseas in the future.

My main remaining question is whether there is any meaningful advantage in choosing ICICI, HDFC, SBI or Post Office for the PPF from the perspective of managing it after becoming an NRI. If anyone has personally gone through this, I would appreciate their experience.

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I already answered that ICICI and HDFC are best serviced for NRIs. ICICI/HDFC have fairly good integrated processes between its normal retail banking, internet banking and NRI banking operations. Its PPF service allows online account opening for eligible residents and transfers from the customer’s savings account to PPF using internet banking. Its NRI documentation also specifically addresses what happens to an existing PPF when residential status changes. If you don’t like either of them, then double check SBI as the next option.

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Thank you for clarifying. That makes sense. I was mainly trying to understand the practical side of managing an existing PPF after becoming an NRI, so your experience regarding ICICI and HDFC is helpful. I will also look into SBI before making a decision.

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To keep things simple, I think its better to have ppf account in a bank where you also hold other relationships like a savings account for instance. This will help streamline your KYC process/changes across all things with say a single visit or single login.

Moreover with CKYC, its becoming more centralized now with institutions asking customer if they can access their CKYC which is common across all financial institutions.

A digital focussed nationalized bank with one of the best corporate governance & too big to fail should be chosen for your different needs. I would not go into names, but first thing you need to ask/check is if all things can be done online or which ones will need a branch visit. Most importantly, can it be done via any branch visit or a home branch visit is mandatory as if its the second case, forget NRI, you may face difficulty even if you go for any job in a different city/state. But thats only in case you need to change any KYC thing or extend ppf, not in using the account etc.

Also, many leading private banks have dedicated facilities, helplines & way of doing things for NRIs.

Lastly, coming specifically to PPF, I dont think one needs too much service from bank about it until exit, except doing/changing nomination in many years or extending account if you want after 15 years or in block of 5 years thereafter.

Above are just personal thoughts with limited understanding & I can be wrong in my assessments.

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Thank you, this is helpful. I especially had not considered whether a PPF related request can be handled at any branch or only the home branch, which seems quite important if someone moves abroad or even to another city.

Just one practical question based on your point about online versus branch requirements. If you were choosing a bank for PPF today with a possibility of becoming an NRI later, what specific PPF related services would you check can be completed online before opening the account?

For example, KYC or residential status update, nomination changes, contributions, withdrawals, maturity and any other request that might otherwise require a branch visit.

I am trying to compare the banks based on practical long term convenience rather than just choosing one based on the bank’s name.

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you have covered everything i believe. contributions are most certainly online everywhere, rest you can confirm. do check if any branch visit in any city would do if at all branch visit is needed.

Once you check, you can let details of these point known here as well for benefit of others.