PPF Accounts: Avoid these mistakes when opening a PPF account in the name of a minor, otherwise you may suffer losses.

PPF Accounts: Minor PPF accounts are an excellent way to secure their children’s future, but parents often make mistakes regarding the investment limits. The total investment limit for both the guardian and the child is only ₹1.5 lakh, and the account must be converted to a major account when the child turns 18.

The Public Provident Fund (PPF) is one of the most trusted and popular investment schemes in India. It not only offers tax savings but also provides secure returns over the long term. Many parents open minor PPF accounts in their children’s names to secure their future. However, some common mistakes are often made, which can lead to future problems.

Confusion over investment limits

The biggest mistake people make is thinking they can invest more than ₹1.5 lakh** by opening separate PPF accounts in their own name and their child’s name. However, as per the rules, the total investment limit for both the guardian and minor accounts combined is ₹1.5 lakh. Deposits above this limit result in no interest and the funds being blocked.

Guardian’s responsibility

In a minor account, the guardian (parent or legal guardian) is responsible for depositing funds and managing the account. People often assume that the account will automatically update when the child reaches adulthood, but this is not the case.

Not updating on time

When the child turns 18, the account must be converted from a minor to a major account. This requires the child to submit their documents. Failure to complete this process on time could result in account operation problems and even block withdrawals.

Mistake in documents

Sometimes, incorrect name spellings on your birth certificate or Aadhaar card can cause problems opening or updating your account. In such cases, the bank or post office may block your account.

Benefits and Precautions

A minor PPF account is a safe investment for your child’s future. However, parents should be careful not to exceed the investment limit, convert the account to a major account in a timely manner, and maintain all documents in order. Guardians must understand that they are responsible for the account until the child turns 18.

A minor PPF account is an excellent financial security tool for children, but it’s crucial to follow the rules when investing. Even small mistakes, like exceeding the investment limit or failing to update the account on time, can lead to future problems. With proper information and careful consideration, this account can become a strong financial foundation for children.

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