Sukanya Samriddhi Account-An investment scheme for your girl child

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In the budget speech, Finance Minister announced a scheme for girl child named Sukanya Samriddhi. Government of India introduced this scheme on 2nd December 2014. Let us see how this will be beneficial to you or your kid’s future.

Girl Child
Who can open this account?

The natural or legal guardian in the name of girl child may open this account. The account may be opened from the birth of a girl child to until she attains the age of 10 Yrs. However, any girl who attained 10 yrs, one year prior to the commencement of this account is also eligible. A depositor may open and operate only one account in the name of girl child.

While opening the account, the guardian must submit the birth certificate of girl child along with that his/her identity proof and residence proof.

A guardian must open a maximum of two accounts. It means guardian or parents not allowed to open more than two accounts under this scheme. The exception to this rule is, the third account is also allowed to open only in case of birth of twin girls as second birth or if the first birth itself results into three girl children. However, a guardian must submit the medical certificate regarding this.

What will be the tenure of this account?

This is the 21 years account. However, one can continue the account even after the 21 years also (without any new contribution) up to her marriage or on request. If girl marries within 21 years then this account ceases there itself. You can deposit into this account only up to 14 years. So from 15th year to 21st year, there is no provision for investment.

How much can you deposit?

The initial investment must be with Rs.250. Thereafter, in the multiplication of Rs.100. Minimum yearly investment is Rs.1, 000 and maximum investment in a year is Rs.1, 50,000 (Year means a financial year). You can deposit up to completion of the 14th year of account opening.

If you do not deposit the minimum yearly deposit of Rs.250 in any year, then such account is considered as inactive. To re-activate this account, you must deposit the penalty of Rs.50 for each inactive year along with that minimum subscription of Rs.1, 000 of those years.

How to deposit to this account?

You can deposit either by cash or through cheque or DD in the name of Postmaster (in case you have account with post office) or the Manager of the concerned bank where you have account. In case of payment through cheque or DD, effective date of investment will be the date of amount realized.

How much is the interest?

Government of India will notify this on yearly base and is usually yearly compounding. However, for the financial year 2014-15 the government fixed the interest rate at 9.1%. This interest so compounded on yearly base will be credited up to the completion of 14 years. The interest rate for 2015-16 will be 9.2%.

Who can operate this account?

The account may be opened or operated by guardian until the girl child attains the age of 10 Yrs. However, once the girl child attains the age of 10 Yrs then child herself can operate the account. However, depositing will be through guardian only.

Whether premature closure allowed?

Yes, it is allowed in case of death of account holder i.e. girl child. The balance along with interest earned will be payable to guardian. Apart from this if, you are really facing financial difficulties and Government satisfy with such hardship, then it may allow premature closure. Examples of such extreme difficulties are like medical support in life-threatening diseases, death, etc.

Whether you get passbook?

You will get the passbook after opening the account. This contains all details like the child’s name, guardian, date of account opened, account number, address and the amount deposited. You must produce the passbook while depositing the account, receiving the interest and at the time of final closure.

Whether account can be transferred?

You can transfer the account anywhere in India when a girl child shifts the place, which is other than the city, where account opened.

How much withdrawal allowed?

You can withdraw the 50% of the balance at the credit, at the end of preceding financial year. This must be to meet the financial requirements of child like higher education or marriage. However, do remember that girl child must attain the minimum age of 18 years for such withdrawal.

Suppose a girl married before the completion of 21 years of account, and then such account is not allowed to operate. The account is closed once she marries.

When the account will get closed?

The account will be closed once it completes 21 years. The account holder must submit the withdrawal slip along with passbook. If account not closed after 21 years, then the balance amount will continue to earn interest until the account closed.

What about taxation?

Contribution towards Sukanya Samriddhi Account will be eligible for deduction under Sec.80 C up to the yearly limit of Rs.1,50,000. But yearly interest earned and maturity amount will be tax free (As per Budget 2015). In short both plan offers you same tax benefit of EEE (Exempt-Exempt-Exempt).

Whether this is the best investment option for child girl?

My observations of this scheme are as below.

  • Tenure of 21 years looks perfect for long term planning of girl child expenses.
  • But will it beat the education and marriage inflation of India? Never…even if we get too many tax exemptions while investing, on interest earned or on maturity. I still consider this as debt product and not suitable for long term goals like child education and marriage.
  • This purely looks like Public Provident Fund (PPF).
  • Why they set the investment tenure only for 14 years? Don’t know!!!
  • It is good that there are restrictions on the number of account opening by guardian.
  • A yearly investment exactly matches the PPF even the conditions like to reactivate the account, PPF interest calculation or withdrawal!!!
  • Online deposit not available. Which I feel a big hindrance. Even though this account may be opened with a bank, but not enabling online investment may be a big hurdle.
  • Current year interest looks great i.e. 9.1%, but not sure about future interest rate. I feel this is the highest fetching interest scheme across all schemes like PPF, the EPF kind of products.
  • A good initiative about allowing kids to operate over 10 years of her age.
  • Premature condition apart from the death of the kid seems to be bit concern. Because, it is hard to make understand about your hardship to Government Officials 🙂 So this seems to be illiquid investment.
  • Tax benefits looks bit attractive as you can feel the deduction under Sec.80 C and rest of interest earned as well as maturity is totally tax free. Hence it offers EEE option.
  • Along with that I am a bit confused whether the interest will be payable monthly or on maturity only. Let us wait for clarity.

Image courtesy of [Stuart Miles] at FreeDigitalPhotos.net

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110 Responses

  1. Sir my question is I have to transfer ssy ac from axis bank to post office what is the procedure ?

  2. Hello your post is very informative and specially with illustration is excellent. However please clarify if the interest rate remains the same during the opening of account or it keep on changing with the change of interest rates. For example in SCSS the interest rate doesn’t change and remains constant but in PPF it keeps on changing.
    Thanks

  3. My child is his 4 months old….i wanted to invest some amount monthly in her name so which investment is best as per ur knowledge and how to invest in that could you please help….

    1. Prasanna-First buy term life insurance in your name to the tune of around 15-20 times of your yearly income. Second, use PPF or SSA as debt and in equity start equity mutual fund investment in ratio of 30:70 between debt and equity. If you are unable to do that, then take the help of an adviser.

  4. Hi Sir,

    I am working at abroad. My family is with me.
    I have opened two Sukanya Samridhhi account through Post office for my two girls.
    One is opened on Apr 2015 and another one Oct 2016 .

    I heard from social media, NREs are not applicable for this scheme.
    Am I eligible to continue this account?

    Thanks in advance.

      1. Hi Sir,
        Thank you for your quick response.
        As I know, initially there is no rule regarding NRE. Post office people didnt inform me that time.
        Now also I called to head post office and they said there is no issue if I have Adhar card.

        I think govt. modified the rule on 2016.
        I have checked modified rule on the NSI website. http://www.nsiindia.gov.in/writereaddata/FileUploads/SSA2016Rules.pdf
        I hope the new rule will only affect the account which are open after 2nd December 2015.
        Please double confirm it for me.
        I have mailed NSI 1 month before and no answer 🙁

        Thanks

        1. JM-You are right. But there is no clarity of whether the old accounts continue or not. Hence, it is best we must assume this rule apply to you also (than blindly continues investing and later on get back money without interest).

  5. Whether payment of interest on Time Deposits Accounts opened by Gazetted Govt. Officers with the help of money belonging to the Govt. are allowed or not? If so, under what rules.

  6. Hi Tonagatti,

    My name is Edward from Bangalore, My daughter was born on Jan 26, 2013. Is there any special schemes / benefits if so Can you please advice me what are the schemes and benefits from the Government of India for her and where can i invest.

  7. Sir, my daughter is of 6 year’s. And I’m searching for best saving plan. I heard about sukanya samriddhi account.

    Kindly advice me is it good to go with this account. And are there tax benefits in this account.

  8. My Father has just got retired, he need some monthly cash in hand.. suggest investment plan @ no risk .

  9. Dear Tonagatti,

    Please suggest us the scheme where i can invest the money now and get the benefits when my daughter will start going to collage as her DOB is 07-11-2007. She is studying in class III now. Also suggest something for my son who is two years old.

    Regards
    Raman

  10. Sir,
    As mentioned in your blog once the girl attain the minimum age of 18 years then 50 % can be withdrawn.
    My question is that will the govt pay 50% of the interest accumulated also?

    Suppose a girl is married at the age of 19 years then will we get the full amount?

    Thanks
    Vasu

    1. Vasu-You can withdraw the 50% of balance available at that time. This balance includes interest also. Once girl child marry in 19th year, then you have to withdraw all amount as this account closes there itself.

  11. Sir
    My child’s DOB is 26-07-2007 & I have deposited Rs 50,000 in my first installment on 21-Mar-2015.

    Now on which month I have to deposit the second installment?

    Thanks, Vinod

  12. Sir,
    When to contribute to get higher returns in Sukanya Samriddhi scheme?
    I prefer to invest yearly. So which month is Preferable?

    And why should I pay in that month?

    Thanks
    Vinod

  13. Hello Sir,

    In Sukanya Samridhi Yojna what is time frame for deposit of money maximum to 150000.
    it is yearly (From January to December) or April to March as per financial year.

    I have one SSY account in post office in the name of my daughter’s name and in post office they told me it is January to December. is it right sir.

    Please confirm sir.

  14. Sir,
    i am from Rajasthan My niece is just 3 months old but i am realy very serious for her future like Education and marriage so pls which is the best plan for her.
    is there any plan offerd by Pradhanmantri yojna ??
    pls help me.
    also my son is 1.8 yrs old so suggest me for his higher Education and marriage which is the best plan ??

    1. Sunny-Stay away from any YOJANAs and start investing in equity oriented balanced fund like HDFC Balanced fund for her long her growth. Also, let her father take proper term insurance to protect his life.

      1. Thank you so much sir,
        also let me know what is the diff b/w EPF and PPF ?
        i am working in a private sector so i want to secure my life and my family.
        i am also investing in Atal Pension Yojana..

  15. Dear Sir,

    Greetings !!

    Sir my daughter is 7 yrs old, I opened a SSA for her before 5 months.

    Sir if she will get marry in age of 21 years than time can i get the maturity amount of SSA.

    Thankyou.
    Manish Kumawat

  16. sir
    i have two daughters. one is 3 years and other is 6 months old. i am a govt. employee. where should i invest for their education and marriage. i am least intrested in 80c rebate as i am already taking 100% rebate under 80c through my PRAN scheme.

  17. dear my sister is 14 years old and i will maarige her at the age of 22 year sir which is the best for her

      1. Think this is a guaranteed plan with compounding interest rate.
        Could you please clarify?
        Is there any other guaranteed plans?

  18. Hello Sir,

    Regarding Sukanya Samriddhi Yojana, I request you to kindly clarify my following concerns:

    1) My daughter is now 10+ years old and I am planning to open an SSA in her name. What would happen in case she gets married between 18 to 24 years of her age in which case the term period of 14 years won’t get completed? Although it has been mentioned in the scheme that after attaining 18 years and getting married the account can no more be operated and needs to be closed and this can be done before the maturity period of 21 years, it is not clear whether the same rule of premature closure is applicable before the completion of the term period of 14 years.

    2) Should the deposit amount be fixed and to be done regularly throughout one FY or can I deposit different amounts in irregular gaps in a year? Does the depositor has this flexibility of depositing any lumpsum amount in multiples of 100 and within the prescribed annual limit for, say, five times in a year ?

    3) In terms of ultimate assured returns, how do you rate this scheme vis-a-vis PPF or APY from the depositors point of view?

    Waiting for your guidance.

    Thanks

    1. Jain-Even though it not completes 14 years, you still can open the account (your daughter is 10 years completed and 11 years started. Hence, opening account for such old kid’s name will be available for this year only). There is no such restriction to invest fixed yearly amount. You are flexible to invest. I prefer PPF than this politically gimmick schemes.

  19. I have 2 Daughters. 1st daughter is 3.5years old. 2nd daughter is of 1 year.
    Which is the best investment I shall plan for them for marriage as well as education.
    Next my query is can Nepalese citizen invest?

  20. Hi

    My daughter was born on 14/02/2003, can we open an account?? If not can you please suggest??

  21. HI, I have a grand daughter (my daughter’s daughter) born on 21 April 2015. Pl Suggest a long term investment plan so that it can be helpful to my granddaughter when she needs for education. Thanks & regards Pushpraj

    1. Pushpraj-A Equity Oriented Balanced Fund like HDFC Balanced Fund is enough. Let they invest monthly and look for growth up to her graduation. At the same time, please persuade your daughter to buy term insurance in her husband’s name to protect their family.

  22. Hi Sir,
    1. In the above article you mentioned that –“I still consider this as debt product and not suitable for long term goals like child education and marriage” — What is mean by that ? why it is debt product?

    2. If the account opened when child age is 8. Then normal account mature year is = 8+21(mature) = 29 th age of child
    And tenure completion 8 + 14(tenure) = 22 nd age of child.
    Am I Right?

    1. Harish-1) Because return on this investment hover around 8% to 9% and it can’t beat the inflation of education or marriage.
      2) Please go through the post once again to understand what I wrote.

  23. Dear Sir
    My daughter is three years old. I want to open jeevan sukanya .please mujhe iski puri jankari de.aur kitne years chalne parenge isko.

  24. my daughter is 6 years old i just wanted to confirm if i invest yearly 12000/- how much i will get returned after 21 years? and another to confirm if i pay 1000 on monthly basis same maturity amount i will get? and is it best to pay on monthly or yearly, pls advice

  25. Hi Basavaraj,

    As we are more or less comparing this scheme with PPF, so I have a question here.

    In PPF it is a well known fact that Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month, does such a clause apply in this new scheme Sukanya Samriddhi?

    Regards
    Durgesh

  26. Dear Sir,
    thanks for the such wonderful information.
    I have to daughters on is of 5+ and other is of 1+ can I open account for both of them.

  27. dear sir,

    i would like to open a sukanya samriddhi account for my daughter. but most of the banks theya re telling that they didnt know about this account. and also the application forms are not available with them.

    sir, request you to kindly let us know when wil this account will active in all banks..

  28. Went to SBI and asked them about this.
    The manager had not even heard about this…

    Is this still work-in-progress or implemented?

    1. Dear Sir,

      Can one deposit variable amounts throughout a year and in irregular frequency or should the investment be of fixed amount to be deposited on monthly / yearly basis? Kindly inform.

      Please also suggest if in view of ultimate return, do you rate APY over SSY for a parent aged about 35 years and child aged 10+?

      Thanks.

  29. Hi sir did reliance pension fund has been launched? Bcoz I came across this in news paper.
    It was given RELIANCE PENSION FUND – WEALTH CREATION FUND & INCOME GENERATION FUND.so if it was launched pl enlighten us with pros & cons of that fund. Thank you.

  30. Hai Basavaraj Tonagatti,

    Excellent write up. Very useful for people like me who prefer simple snapshot with some examples, also including pros and cons. Thank you.

  31. Hi Basavaaj

    Very informative. Though all things remain same as PPF , one is specific exclusively for girl child which gives some satisfaction . thanks a lot for sharing.

  32. Dear Sir..

    Its wonderful the way u explain the calculations. I will be extremely grateful to you if you could help me with this. I know its not the right blog to ask this but still hoping for your reply.
    I want to know the exact surrender value for Jeevan saral plan of LIC. I am investing Rs 3000/- month in Jeevan saral for 15 years term starting in March 2011. If I surrender after completing 5 years of premium paid ( i.e in April 2016) what amount I should assume to get ? Pls help. My maturity sum assured is Rs 750000/
    Thanks a lot.

  33. Thanks Basu.
    But all these are different types of PPF savings with minimal alteration in years, withdrawal policy etc…
    As you said, this will not help in the long run with the inflation. Old but still a better way is to do SIP in a good balanced fund.

    Thanks,
    Chandra.

    1. Hi Sandeep,

      Yes, it has been included under section 80c for income tax saving. But maturity amount will be considered as taxable. may be they will further change this rule as well.

      1. Hi sandeep,

        Hope government will change maturity amount as non-taxable, if not then its better to find other ways to invest because post tax effective interest rate will be much lesser.

        1. Dear sir

          Kindly confirm about the one time full payment 50000 rupee who much amount received 21 years after ?

          My daughter name

          Manvi
          Date of birth 1/09/2016

          Pls reply me I will wait your reply .

          Thank//Regards

          Rajeev Kumar

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