My daughter Gauri, is learning advanced features of MS Word and wanted to type some documents as an assignment. She approached me and I suggested, her to help me out. I handed her some notes and paper cuttings and here she is with her first 500 words on – Sukanya Samriddhi Yojana.

She has experimented a lot in formatting, using all kind of bullets and branching the text. But it was worth it- She wrote what I wanted to write since long. Here are the details of this initiative on girl child welfare – Sukanya Samriddhi Yojana or Scheme.

New Changes – Aug 2018

1) Minimum amount brought down to Rs 250, from Rs 1,000 earlier.

2) The minimum annual deposit requirement, every year, has also been lowered to Rs 250, from Rs 1,000 earlier.

These above 2 new rules came into effect from July 6, 2018.

Recent Change Makes Sukanya Samriddhi Yojana More Attractive

Since April 1, 2017, the rates of small savings have been reduced. The country is witnessing low inflation-low interest rate- high growth phase. Interest rates will be subdued for at least a couple of years. In case you are conservative/moderate risk profile investor, the scheme suits you as it offers the interest rate which is highest of the available rates.

What is Sukanya Samriddhi Yojana?

The Sukanya Samriddhi Yojana is a scheme launched on 22 January 2015 as a part of the Beti Bachao Beti Padhao of Prime Minister Narendra Modi.

It encourages parents to build a fund for the future education and marriage expenses of their female child. Society has changed a lot when it comes to thinking that a girl child means – expenses especially related to marriage.

I have told my daughters that I will save and invest for their education and education only. They have to fund their marriage by working and making a career of themselves. And career comes when you expose them to a good education.

This scheme can be used to accumulate a corpus which can help fund your daughter’ educational needs.

Eligibility

• Girl child only.
• The child should be Indian citizens. NRI, OCI, and others cannot open an account under this scheme.
• On the date of opening the account, the child age should be 10 years or younger.

 Who can invest?

• Parents of the eligible girl child.
• A legal Guardian/Natural Guardian of the eligible girl.

Deposit

• Minimum Rs 1000/- needs to be invested in a financial year, thereafter in multiples of 100/-.
• Maximum of Rs 1, 50, 000/- can be invested in a financial year. Section 80 C limit apply here.
• The deposits can be made for 15 years from the date of opening of the account.
• Deposits can be made in lump-sun or spread out manner. No limit on a number of deposits either in a month or in a financial year.

Rate of Interest

• The rate of interest is 8.4% Per Annum (w.e.f 1- 4- 2017), compounded yearly. Interest rates will be revised quarterly by GOI, as they revised for other small savings schemes.
• Interest will be paid on funds deposited on or before 10^th of a month of that month.

5 benefits of Sukanya Samriddhi Yojana

• Higher interest rate compared to any other saving scheme.
• Tax benefits under section 80C. There will be no tax on the amount invested, amount earned as interest and the maturity benefits.
• No restriction on amount and number of deposit. Any amount can be deposited in Multiple of Rs. 100 subject to a minimum limit of Rs. 1000 and a maximum limit of Rs. 1.50 Lakh per financial year.
• Transferable anywhere in India.
• Even girl child can operate after she attains the age of 10 years.

About the account

The account can be opened in 28 specific banks, or in any post office across the country.

The account will be opened and operated by the parent/guardian of the amount holder until she attains the age of 10 years.

On attaining the age of 10 years, the girl child may herself operate the account if she wishes to do so. If not, the guardian will continue operating the account.

The account can be transferred anywhere in India. From or to post offices and from the bank and between post offices and Bank.

A guardian is allowed to open maximum two accounts in the name of two different girl children. However, in the case of twin birth parent is allowed to open up to three accounts for three different girl children.

Maturity

The account matures after 21 years from the date of opening, or when the marriage of the girl child happens; whichever is earlier.

If the child gets married before maturity of the account, she can choose to continue or close the account.

Premature Closure is allowed in the event of the death of the girl child when account holder becomes a non- citizen or NRI, and the cases of extreme compassionate grounds such as medical support in life-threatening diseases.

Withdrawal

Maximum 50% of deposit amount can be withdrawal for higher education of girl child, once she reached 18 years of age, or passed 10^th standard, whichever happens, earlier.

Rest of the portion can be withdrawn once the girl attains 21 years of age which is maturity for the account.

So here Gauri ends her assignment and here are my concluding remarks.

Should You Invest?

If you are a conservative investor you can but following things should be kept in mind:

• The rate of interest is high in comparison but does not beat education inflation which has come down in recent times but is still around 10% pa.
• Ok if you contribute say 100000/- pa (one or 2 accounts), and at an average rate of 8%, you will make Rs 8170000/- in 21 Years. So amount wise it looks good if you planning to get your child a foreign education also. Provided you open account in the year child is born.
• Account looks like a 21-year PPF s cheme, so you should be ready to face illiquidity and have other sources to fund various contingencies.

Apart from this or other government debt schemes, you should also plan for your children using the financial planning and active portfolio management.

Do share your experience with Sukanya Samriddhi Yojana. Wil you subscribe? Share in the comment section below. This article can also be shared with your social circle using the sharing buttons on the page.