What is Sukanya Samriddhi Yojana?
Sukanya Samriddhi Yojana was launched in year 2014 by PM Narendra Modi. It is part of Beti Bachao Beti Parao. The scheme is only for parent having girl child. It was launched as a measure to help parents having Girl child.
It provides them with a investment instrument which will help them financially at the time of higher studies and Girl marriage. Marriage of a Girl is still a big concern for Indian parents. So Government took that burden to some extend by launching this scheme.
Many people still do not have an Sukanya Samriddhi account due to lack of knowledge and clarity. This article is an effort to clear those doubts and help you understand the scheme.
Sukanya Samriddhi Yojana features
I have listed all the important features below. These will help you understand the Yojana better and make your decision. From here on word account means Bank account (Sukanya Samriddhi Account).
Account Opening rules
The account will be opened in name of the Girl Child by either Mother or Father but not both. That is every Girl can have a single account. The account can be opened for only 2 Girls. For example if any one has more than 2 Girls then the person can only open account for 2 girls.
This is relaxed if the Girls are twins. The account can only be opened if age of Girl child is less than 10 years at the time of Account opening.
Document required for Account Opening
Original circular of Government mentioned only Birth Certificate as mandatory document to open account . But this is not the case. At least I have talked with more than one Bank (SBI , ICICI , HDFC and BoB) and they all have asked for Aadhar Card of Girl child.
So it is better to have Aadhar Card of Girl child. This is the only document required. For parents ID proof and Address proof are mandatory documents. All these documents are already requirement for Bank Account opening so should not be an issue.
Deposit Criteria
You can open account with minimum initial deposit of 1,000 INR. After that you can deposit in multiples of 100 INR. The maximum amount you can invest in a financial year is 1,50,000 INR that is 1 lakh 50 thousand rupee.
The minimum amount you can deposit in a financial year is 1,000. As per year 2018 this has been revised and now the minimum amount to deposit is 250 INR. If you have not deposited this amount of money then you will have to pay 50 INR as penalty.
The deposits can be made till the period of 15 years from date of opening of account. That is if you open the account now then till 15 years you can deposit money in to it.
How to deposit in account?
The deposit can be made in Cash or Cheque or Online transfer. So this is not a limitation for you.The deposit can be made by Guardian or the Account holder (your child) if the age of child is above 10 years.
Interest of deposit
The interest rate on this account is determined every year by Government of India. The interest rate has been great over the years.Below are the interest rates for different years from the date of commencement.
Note now Government has started declaring interest rates for Quarters but there is hardly any major difference in rates so I will mention yearly rates below
- Year 2014 – 15 = 9.1%
- Year 2015 – 16 = 9.2%
- Year 2016 – 17 = 8.6%
- Year 2017 – 18 = 8.1%
Tax Benefits
Sukanya Samriddhi Yojana has triple tax benefit. The amount you invest in it is Tax free under 80C. The interest is also tax free and the maturity amount is also tax free. So you get all the tax benefit in this account. This feature makes it one of the best investment option.
Above I have mentioned the Interest rate. The interest rate along with tax benefit provides excellent return in this instrument.
Money Withdraw
You can withdraw 50% of the balance in your account after the child has passed 10th exam or has age of 18 years or more. Money can be withdrew for higher education purpose after producing document which justify need of money.
You need documentary proof about offer of admission in a college or school. You can also show Fee Slip. The withdraw amount can be restricted to amount of money you need for education purpose.
Also you can withdraw money once in a year. You can either withdraw money all in a time or in span of 5 years with one withdraw made per year.
Account Closure
The account get closed on completion of 21 years from the date of opening of account. You can also close it prematurely if the child is getting married. You need to provide proof that child is above 18 years of age on marriage date.
You can not withdraw money one month before marriage or after 3 months of marriage. So you have to take note of this clause as well. The investment along with interest will be paid to the Child after account closure or withdraw.
Note you will not earn any interest on the amount after completion of 21 years.
Sukanya Samridhhi Yojana Benefits
I have stated all the features of the account. That should give you idea of benefit this account provides. I will explicitly cite out the benefits in this section and then we will discuss the disadvantages of this account as well.
The biggest benefit of this account is the Interest rate you get. The interest rate is best among all safe fixed deposit type of investment options. It is better than PPF as well. The triple tax benefit on maturity is also great for tax paying citizens.
If you consider tax benefit coupled with interest rate it is the best safe deposit Government of India scheme you can invest in.
The minimum money you have to invest per year is also less so should not be problem for most of the people. The penalty of not depositing minimum amount is also less 50 INR. These terms and conditions make it better than most private sector products out there.
Sukanya Samridhhi Yojana issues
Only major problem with this account is the money withdraw rules. The money or investment gets locked for 21 years. You have luxury of withdrawing money after the child attains 18 years but that is equal to education expense of the child only.
The education expense can be withdrawn for 5 years. So for higher education this should be sufficient. But the rules governing education expense withdraw are not well defined. For example if the child needs Laptop or Hostel facility outside the College then what should be done in that case.
Since not many withdraw cases have emerged as of now so clarity if not there. Also for marriage you can withdraw money with in a time frame. This puts a significant limitation and becomes hectic. The person having marriage at home will be more occupied with the task and has no clear indication on when to get the money.
Like shall the application be made 1 month before money or can be made in advance. If it can be made in advance and money will get into Child account just 1 month before then it is fine. If not then it is not fine. As people applying for withdraw will have to fulfill all criteria and process can take time.
Where to open Sukanya Samridhhi Yojana account?
The best place to open this account is bank. I would not recommend opening it in Post Office. Most Post office are not yet CBS. You can open it in top tier banks like SBI , ICICI or HDFC. They all offer the account.
That way you can make online transfer and maintain the passbook online. So you can use Internet banking to operate the account without any issues. This will help individuals filing Income Tax returns as well.
You can also transfer your account to any where in India. So it is easy to transfer from one bank to other as most banks are CBS now.
How to open Sukanya Samridhhi Yojana account?
You can visit any branch of SBI or any other bank (note for private banks you can call them at your residence as well) with required document. The documents you need is already mentioned in the documents section of the article.
You need to fill in a form and submit the same along with deposit amount. Government banks will give you Passbook. You also have option to maintain the details online as well for Private as well as Government banks.
I would recommend opening the Sukanya samriddhi account in bank you already have your Savings account.
Conclusion
It is a new scheme so many things are not well defined. The deposit process and account opening process has matured in this 4 years. Initially the bank staffs were not sure on Account opening process but now people are aware of the process.
Account closure and withdraw cases have not yet commenced so process is still not very detailed. Government has option to make it more account holder friendly with time. So I do not think this will be an issue in near future.
This scheme is getting importance from Government as well. Like PPF which now has well defined process for deposit and withdraw Sukanya Samriddhi will also mature with time. So if closure or withdraw is stopping you to invest in it then you should not worry.