The Government of India has amended some of the rules relating to investing and holding of government-backed small savings schemes such as Public Provident Fund (PPF) and National Savings Certificate (NSC). According to the new rules, such small-saving accounts will close the day account holder’s (or investor’s) residential status changes to a non-resident Indian (NRI). An NRI is a person residing outside India who is a citizen of India or a Person of Indian Origin (PIO).
Let’s read more about these amendments in the rules and what will happen to the investments in these schemes, once an investor’s status changes to NRI.
The amendment
A central government notification dated 3 October 2017, which was published in the Gazette, states that, “Provided that if a resident who opened an account under this scheme (PPF), subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident.”
In a separate notification regarding NSC, it states that the investment in the certificates is deemed to be encashed on the day the holder becomes an NRI.
