PPF account for minors: What parents can and cannot do with their child’s savings

An recent case involving a legal conflict between a father and daughter over ownership of a PPF account has put the focus on parental financial boundaries. The daughter sued her father for withdrawing all funds from her PPF account before she could claim it upon maturity.

Aggrieved by her father's action, she approached the court, alleging that he had falsely withdrawn over ₹ 8 lakh and closed the PPF account in 2016, claiming that the money would be used towards her education and maintenance expenses.

The complainant, now a college student, complained that she was facing difficulties in funding her education, particularly after her parents separated due to a marital discord and she began living with her mother.

The father later argued that the amount should be adjusted against maintenance paid to his daughter and wife. The Delhi High Court, however, rejected his argument and upheld the decree directing him to return the entire Public Provident Fund (PPF) corpus, along with 8% annual interest.

Yes, a parent or guardian can withdraw money from their child's PPF account in certain circumstances, but the funds cannot be used for the parent's personal expenses, said Aditya Chopra, Managing Partner at The Victoriam Legalis (TVL).

He further clarified that while the account may be operated by the parent when the child is a minor, the savings are held for the child's benefit and only they are entitled to them upon attaining the age of 18.

Additionally, a parent cannot appropriate or adjust a child’s investment towards the discharge of the parent’s independent legal obligation to maintain the child, said Apoorva Pandey, Advocate at Delhi High Court.

“Where funds are invested in the child’s name for the child’s benefit, the parent, even as guardian, holds such funds in a fiduciary capacity and cannot utilise them to offset maintenance obligations,” she added.

A parent or guardian's role in a child's PPF account is limited to operating and closing the account when it's time for a handover. For instance, closing a minor's PPF account on maturity is not, by itself, improper.

They can also make withdrawals if the money is meant to be used for the child’s education, medical treatment, or other legitimate upbringing. But, that does not mean they can deprive the child of basic maintenance.

Parents must continue to meet their maintenance obligations towards the child, from their own resources. Similarly, in cases where a court has separately ordered maintenance for a spouse, that too must be funded by the parent and not from the child’s PPF savings.

Once the child turns 18, the guardian’s role comes to an end. The parent is then expected to hand over control of the PPF account to the child, along with its full accrued balance for their expenses.

As per specified rules, both parents cannot invest ₹ 1.5 lakh each in their child’s PPF account. If they do, the total annual contribution will be raised up to ₹ 3 lakh, which is not permitted.