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 is an initiative under the larger “Beti Bachao, Beti Padhao” scheme.

What Is the Objective of the Pradhan Mantri Sukanya Samriddhi Yojana?

“Sukanya Samriddhi” means the prosperity of the girl child. The scheme was created to encourage parents and guardians of girl children below the age of ten years to begin saving money so that they may have a solid financial footing to continue with higher education, pursue entrepreneurial dreams, or for covering their marriage expenses.

How to Open the Account

Under this scheme, every girl below the age of ten years is eligible for a special savings account, with a higher-than-normal interest rate, and several other concessions. The account receives deposits for 15 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 may open the account, provided the girl is younger than ten years old. Accounts can be opened for only two girl children per guardian/family. An exception is made in the case of twins and triplets.

2. Eligibility Criteria

• The scheme is only for girls.
• A single girl child can only have one Sukanya Samriddhi Yojana account.
• The girl for whom the account is being created should be below ten years of age.
• The girl should be an Indian citizen and residing in India.

3. Required Documents

• Birth certificate of the girl child
• Photo identity and address proof of the depositor

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 the Sukanya Samriddhi Yojana Account (SSYA), although the guardian is making the deposits. In the unfortunate case of premature death of the child, the guardian can claim the balance amount and interest accrued since the day of the opening of the account.

6. Authorised Banks to Open the Account

SSYA can be opened in all post offices, public sector banks, and a few authorised private banks. The form to open an SSYA can be downloaded from the RBI’s website. However, since this account cannot be opened online, it 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

Sukanya Samriddhi Yojana – FAQs

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

1. Is account transferability possible?

SSYA 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 SSYA is Rs. 250 per annum, and thereafter any further amount can be deposited in multiples of Rs. 100. The maximum deposit is Rs. 1,50,000 per annum.

3. When is the penalty imposed?

A penalty is imposed if the depositor fails to meet the minimum contribution of Rs. 250 each year. The penalty is Rs. 50 per year, along with the minimum amount of deposit for that year.

4. What is the rate of interest per annum?

The rate of interest for an SSYA account for the financial year 2020-21 is 7.6%. The rate is revised at the end of every financial year.

5. What is the term period?

Deposits are made for 15 years. The account matures at 21 years. However, if the girl wishes to close the account at any time after completion of 18 years for the sake of marriage, it is allowed, provided she furnishes an application with a request for premature account closure, and age proof confirming that she will not be less than 18 years of age on the date of her marriage.

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 withdrawal 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 18 years and before the maturity of the account, it can be closed in the period of one month before marriage, or three 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 are the tax benefits?

The principal amount invested, the interest, and the maturity amount are tax-free. The tax deduction benefits on the principal amount invested are up to Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961.

Benefits and Drawbacks of the Scheme

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

Benefits

• Low minimum investment: With a yearly minimum of Rs. 250 per year, this savings account can be kept alive through thick and thin. As your income increases, deposits can increase with it, to a maximum of 1.5lakh 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 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 the savings (50% or lower) to pursue higher education after matriculation.
• High interest rate: SSYA 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 SSYA scheme does not counter it in the long run, the savings may be ineffective.
• Inferior market-linked schemes: While SSYA is low on risk, riskier savings schemes based on mutual funds provide higher interest in the long run. The interest for SSYA has decreased from 9.1% at launch to 7.6% 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 liquidate your earnings and invest it in other places or schemes for greater earnings. SSYA 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 SSYA. 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 SSYA by using a calculator made on a data sheet. The columns you need to fill are shown in the table below.

Age of Girl Child: Enter age of girl child

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

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

Deposit Amount: Put in 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.

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 the monthly and yearly investment.
• It can be set up on 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 the deposit cap at 1.5 lakh yearly.
• Interest rate changes yearly and must be put in manually.

How to Close the Account

As SSYA 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?

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

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

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

• In case of closure due to the death of the girl child: Death certificate
• In the 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 2020

• Partial withdrawal of savings for higher education or marriage is allowed after the girl turns 18.
• Life-threatening illnesses or medical emergencies are now considered as causes for full closure.
• Accounts can be transferred from the post office to banks, and vice versa.
• A few private banks have been authorised to open SSYA accounts – ICICI, HDFC, Axis, and IDBI.
• Balance, interest and withdrawal on SSYA are non-taxable.
• Electronic deposits have been allowed for those banks and post offices that have the facility.
• The scheme can be availed for adopted daughters.
• Interest for the current financial year (2020-2021) has been pegged at 7.6%

The Government has given 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 to the lives of girls in India, over the coming decades.