Sukanya Samriddhi Yojana – An Account for Your Girl Child

Sukanya Samriddhi Yojana - An Account for Your Girl Child

Sukanya Samriddhi Yojana is a scheme introduced by the Central Government of India in January 2015. It is a savings account scheme for girl children and was an initiative under the larger “Beti Bachao, Beti Padhao” scheme.



What is the Objective of Pradhan Mantri Sukanya Samriddhi Yojana

“Sukanya Samriddhi” means prosperity of the girl child. The scheme was created with the aim of encouraging parents and guardians of girl children below the age of 10 years to begin saving money so that they may have a solid financial footing to continue with higher education, pursue entrepreneurial dreams or even marry the girl off.





How to Open the Account

Under this scheme, every girl below the age of ten years is made eligible for a special savings account with higher than normal interest rate and several other concessions. The account receives deposits for 14 years and matures at 21 years since the opening of the account.

1. Who Can Open the Account?

Either of the girl’s parents or a legal guardian of a girl child, may open the account, provided the girl is less than 10 years old. Accounts can be opened for only 2 girl children per guardian/family. An exception is made in the case of twins and triplets.




2. What is the Eligibility Criteria?

  • The scheme is only for girls.
  • The girl for whom the account is being created should be below 10 years of age.
  • The girl should be an Indian citizen, residing in India.

3. Required Documents

  • Birth Certificate of the girl child
  • Address Proof
  • Photo Identity Proof

4. Residence

It is stipulated that the girl child availing the benefits of the scheme should be a resident of India throughout the duration of the scheme.

5. The Account in the Name of the Beneficiary

Only the girl child is meant to be the beneficiary of Sukanya Samriddhi Account (SSA), although the guardian is making the deposits. In the unfortunate case of premature death of the child, the guardian can claim for the balance amount and accrued interest since the day of the opening of the account.





6. One Girl One Account

The opening of an account is limited to one account per girl.

7. Authorized Banks to Open the Account

SSA can be opened in all post offices, public sector banks and a few authorized private banks. Form to open SSA can be downloaded from RBI’s website. However sukanya samriddhi yojana account cannot be opened online. The opening of the account has to be done at the concerned branch.




List of SSA Authorised Banks:

  • State Bank of India (SBI)
  • State Bank of Mysore (SBM)
  • State Bank of Hyderabad (SBH)
  • State Bank of Travancore (SBT)
  • State Bank of Bikaner & Jaipur (SBBJ)
  • State Bank of Patiala (SBP)
  • Vijaya Bank
  • United Bank of India
  • Union Bank of India
  • UCO Bank
  • Syndicate Bank
  • Punjab national bank (PNB)
  • Punjab & Sind Bank (PSB)
  • Oriental Bank of Commerce (OBC)
  • Indian Overseas Bank (IOB)
  • Indian Bank
  • IDBI Bank
  • ICICI Bank
  • Dena Bank
  • Corporation Bank
  • Central Bank of India (CBI)
  • Canara Bank
  • Bank of Maharashtra (BOM)
  • Bank of India (BOI)
  • Bank of Baroda (BOB)
  • Axis Bank
  • Andhra Bank
  • Allahabad Bank

Little girl at the ATM

Sukanya Samriddhi Yojana – FAQ’s

Here are some frequently asked questions about SSA that will give you more clarity on the minor details of the scheme.





1. Is account transferability possible?

SSA can be transferred from one bank to another or from a bank to post office or vice versa. The beneficiary of the account cannot be transferred.

2. What is the minimum contribution?

The minimum yearly contribution to SSA is Rs. 1000 per annum. The maximum is Rs. 1,50,000 per annum. The minimum amount to open an account is Rs. 1000.




3. When is the penalty imposed?

The penalty is imposed is depositor fails to meet minimum contribution of Rs. 1000 each year. The Penalty is Rs. 50.

4. What is the rate of interest per annum?

The rate of interest for SSA account for the financial year 2018-19 is 8.1%. The rate is revised at the end of every financial year.





5. What is the term period?

Deposits are made for 14years. The account matures at 21 years. However, if the girl wishes to close the account at any time after completion of 18yrs, for the sake of marriage, it is allowed.

New rules allow non-closure of account on the maturity of 21 years. Such accounts will continue receiving interest.




6. Is premature withdrawal allowed?

Premature withdarwal is allowed on these grounds:

  • Death: The death of the child.
  • Medical Emergencies (Compassionate Grounds): If the girl child faces a serious illness or medical emergency.
  • Financial Inability: If the depositor is unable to meet the minimum payments and the authorities recognise the financial strain.
  • Marriage: If the girl gets married after the age of 18yrs and before maturity of account, it can be closed in the period of 1 month before marriage and 3 months after marriage.
  • Partial Withdrawal: On completion of 18yrs, up to 50% of savings in the bank can be withdrawn for the purpose of higher education.

7. What is the tax benefits?

The depositor (guardian of the child) is eligible for Income Tax deduction on the amount deposited every year. Note that only one guardian (mother, father or legal guardian) can claim a tax deduction, not both!





Benefits and Drawbacks of the Scheme

The Sukanya Samriddhi Yojana scheme is designed to be an easily accessible savings scheme for middle and lower classes. This brings with it several advantages and a few disadvantages.

Benefits

  • Low Minimum Investment: With a yearly minimum of Rs. 1000 per year, this savings account can be kept alive through thick and thin. As your income increases, deposits can increase with it, to the maximum of 1.5lacs per year, according to one’s convenience and financial situation. This makes it flexible in comparison to other savings schemes in the market.
  • Tax Benefits: One depositor, either the mother, the father or in other cases, legal guardian, can avail of 100% tax exemption on Income tax for the amount deposited in this scheme. The amount in the savings account is exempt from taxation even after maturity!
  • Flexibility: The account offers the option of premature closure on the occasion of marriage or withdrawal of a partial amount of saving (50% or lower) to pursue higher education after matriculation.
  • High-Interest Rate: SSA has the highest interest rate among all small savings schemes offered by the Government. It is a high priority scheme for the Government and interest is calculated to be .75% above the average Government-Sector yield for the previous ten years.
  • Low Risk: Even though the interest rate is revised every year it will be stable and remain high among savings schemes. As it has the backing of the Government and does not depend fully on the markets, like mutual fund investments, the risk of markets is mitigated.

Drawbacks

  • The Threat Of Inflation: We cannot predict or calculate with surety the intensity and prevalence of inflation over a period of 21 years. If inflation rates go up and the yearly revised interest for SSA scheme does not counter it in the long run, the savings may be ineffective.
  • Inferior Market Linked Schemes: While SSA is low on risk, riskier savings schemes based on mutual funds provide higher interest in the long run. The interest for SSA has decreased from 9.1% at launch to 8.1% in the current financial year while market linked schemes have shown a high interest of 12% over the past 20 years.
  • Not as Flexible as Market Linked Schemes: Equity Linked Savings Schemes usually have a lock-in period of 3 years. After this period, you can liquidise your earnings and invest it in other places or schemes for greater earnings. SSA does not offer this level of flexibility.

How to Calculate the Maturity Value of Sukanya Samriddhi Yojana

You could use a table to calculate the yearly amount you can save using SSA. Note that investing amounts monthly can change the final yearly amount as interest is calculated monthly for this account.




1. How to Make Your Own Calculator?

You can calculate the maturity value of your SSA by using a calculator made on a data sheet. The columns you need to fill are shown in the table below.

A B C D E F G
1 Age of Girl Child Account Age Date Of Deposit Deposit Amount Principle Amount at Year End Total yearly interest Total amount at year end
2
3 D3 + G2 E2 + F2

 

Age of Girl Child: Enter age of girl child


Account Age: Enter the number of years the account has been open for.

Date of Deposit: The date on which you last deposited an amount toward the scheme

Deposit Amount: The amount deposited

Principle Amount at Year End: Here, the total amount from the end of the previous year is added to the amount deposited in the current year. For example, in the second row, the formula would be D3 + G2, the numbers progress on each row


Total Yearly Interest: Insert the interest calculated on the principal. at the interest rate for the current year here.

Total Amount at Year End: Add principle amount and current year’s interest. E2 + F2

Benefits of the Calculator

  • You can calculate yearly savings accurately.
  • It can calculate sukanya samriddhi yojana maturity amount based on monthly and yearly investment.
  • It can be set-up to excel with the proper formulas.
  • You can avoid mistakes while calculating.

What are Its Limitations

  • If automated in excel or other software, the calculator does not keep deposit cap at 1.5lacs yearly.
  • Interest rate changes yearly and must be input manually

Mother and daughter working on laptop

How to Close the Account?

As SSA had only begun in 2015, no deposit as yet has reached maturity, and there is some confusion about the closure of the account.

1. When Can You Close the Account

SSA is a savings account, and as such, it cannot be closed before maturity in ordinary cases. There are only 3 instances when the account can be closed, apart from closure when the account has achieved maturity at 21 yrs since opening.


  • Death of the child
  • Life-threatening illness or medical emergency
  • Financial Inability of the guardian to meet minimum payments
  • The marriage of the girl child, after 18 yrs of age

2. What Documents Required at the Time of Closing the Account?

  • In Case of Closure due to Death of The Girl Child: Death Certificate
  • In Case of Medical Reasons: Medical Certificate and Doctor’s recommendation. This type of closure is only given on the strictest grounds.
  • In Case of Closure due to Financial Difficulty: Income certificate. As per notifications are given it is said that government authorities need to investigate this on a case by case basis and make the decision to terminate the account.
  • In Case of Account Maturity: Regular bank or post office passbook and related documents.

What are the Recent Updates Till 2018

  • Partial withdrawal of savings for higher education can be made either as a lump sum or as up to 5 yearly instalments.
  • There is an option to continue the account after marriage. Marriage is no longer compulsory grounds for closure.
  • Life-threatening illness or medical emergency is now considered cause for full closure.
  • Accounts can be transferred from post office to bank and vice versa.
  • Few private banks have been authorized to open SSA accounts – ICICI, HDFC, Axis and IDBI.
  • Balance, interest and withdrawal on SSA are non-taxable.
  • The electronic deposit has been allowed for those banks and post offices that have the facility.
  • The scheme can be availed for adopted daughters.
  • Interest for a current financial year (2018-2019) has been pegged at 8.1%

The Government has given a high priority to this scheme, and it has the highest interest rate for savings schemes. It is an easily accessible scheme for middle and lower income families, and it has the potential to make drastic improvements in the lives of girls in India, in the coming decades.