Consumer forum slaps ₹50,000 fine on postal department for withholding PPF interest

Kamath was informed of a new regulation stipulating that only individual PPF Accounts could be opened, with family PPF accounts disallowed.


Published May 11, 2024 | 2:57 PMUpdatedMay 11, 2024 | 2:57 PM

postal department

A district consumer forum in Udupi, Karnataka, has slapped a penalty of ₹50,000 on India Post for failing to pay the interest amount on PPF contributions made by a customer and directed the department to remit the sum.

According to Ravindranath Shanbhag, convener of the Human Rights Protection Federation, the postal department is the respondent in this matter.

“This ruling came about after Kamath accused the postal department of deficient service for refusing to pay an interest sum of ₹11 lakh on his investment in the central government-sponsored Public Provident Fund (PPF).”

Venkatesh Kamath, as the head of a Hindu Undivided Family (HUF), opened a Family Public Provident Fund (HUF) account at the Karkala Post Office for the benefit of his family members and his own retirement security.

The account was opened in 2001 for a 15-year tenure, with PPF contributions made annually.

Upon approaching the post office in 2016 for withdrawal, the postmaster advised Kamath to extend the PPF account for five additional years, a course he pursued until 2021, making regular contributions annually.

The post office duly recorded the contributions and accrued interest in Kamath’s passbook. In March 2021, Kamath agreed to continue contributing for another five years, as suggested by the postmaster.

These transactions proceeded smoothly until March 2023, when a letter dated 22 June, 2023, from the postal department caught him off guard. The Senior Post Superintendent at Puttur instructed Kamath to promptly close his PPF account and visit the post office with the necessary documents.

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A new regulation

Upon inquiry with the postmaster regarding the letter, Kamath was informed of a new regulation issued on 13 May 2005, stipulating that henceforth, only individual Public Provident Fund Accounts could be opened, with family PPF accounts disallowed.

It was further stated that PPF accounts opened before 13 May 2005, should have been closed upon expiry (of 15 years), with no interest paid for the period after 2016. Kamath contested this, questioning how the postmaster could have advised him to contribute annually to the PPF account and duly record it in the passbook if such a regulation did not exist.

The postal department admitted to understanding the discrepancy only during an audit conducted on 22 May 2023. Subsequently, Kamath sought recourse through the Human Rights Protection Foundation (HRPF) in Udupi, which lodged a complaint on his behalf before the Consumer Disputes Redressal Commission in the district.

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