Question

The Public Provident Fund (PP

  • F , introduced in 1968, is a government-backed savings instrument. Evaluate the following statements based on its rules: I. A PPF subscriber is permitted to make a partial withdrawal starting from the 7th financial year of the account. II. The loan facility under PPF is available for a maximum of 25% of the balance at the end of the 2nd year immediately preceding the loan application year. III. If the subscriber fails to contribute the annual minimum of Rs. 500, the account becomes discontinued and can be revived by paying a penalty of Rs. 50 per year of default along with arrears. IV. If a PPF account is discontinued, the subscriber loses all accumulated interest permanently as it is forfeited by the government. Which of the statements given above are correct?
A I and II only Correct Answer Incorrect Answer
B II and III only Correct Answer Incorrect Answer
C III and IV only Correct Answer Incorrect Answer
D I and IV only Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Statement I is wrong partial withdrawal is permitted from the 7th financial year onwards (i.e., after 6 completed years), not after 15 years. Statement II is correct the loan ceiling is 25% of the balance at the end of the 2nd preceding year. Statement III is correct the account is discontinued but can be revived by paying Rs. 50 penalty per default year plus arrears of minimum deposit. Statement IV is wrong interest continues to accrue on a discontinued account; it is NOT forfeited.

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