Sukanya Samriddhi Yojana: A Complete Guide
Features of Sukanya Samriddhi Yojana:
Sukanya Samriddhi Yojana (SSY) is a small savings scheme for the girl child, launched by Prime Minister Narendra Modi on 22 January 2015, under the government’s “Beti Bachao, Beti Padhao” programme. It has been specially designed to meet the higher education and marriage expenses of a girl. Since its launch, the scheme has emerged as a major small savings instrument in the country, especially in the nonurban and rural belts.
Gender inequality is one of the most disturbing issues in our country and Sukanya Samriddhi Yojana (SSY), according to government claims, is a great step to eliminate the bias. Education of the son often gets preference over that of the daughter in India, and wedding expenses of girls are seen as a big liability. Sukanya Samriddhi Yojana (SSY) would help girls attain financial independence and allow them to pay for their higher education and wedding expenses. One of the most important features of the scheme is that the deposited amount can be withdrawn only by the girl child and not by her parents/guardian.
Who can open an account?
A Sukanya Samriddhi Yojana (SSY) account can be opened only by the parents or the legal guardian of the girl child, for up to two children. An exemption may be made in case of twins or triplets, on producing a medical certificate from a competent medical institution. Only one account can be opened for each child.
A Sukanya Samriddhi Yojana (SSY) account can be opened anytime after the birth of a girl till she attains 10 years of age. However, children born after 2 December 2003, are eligible to open an account.
Where to open an account?
Accounts can be opened at a post office near you or at any branch of nationalized banks like Bank of Baroda, State Bank of India, Punjab National Bank, Canara Bank, Allahabad Bank, Union Bank of India, and others. Some private sector banks like HDFC, Axis, ICICI etc. also offer the scheme. Banks are added to the list from time to time.
Birth certificate of the girl (account beneficiary), along with an identity and address proof of the parent/legal guardian (ration card, passport, driving license, landline telephone bill, electricity bill etc.), must be produced at the time of opening the account.
Maximum and minimum deposits
A Sukanya Samriddhi Yojana (SSY) account can be opened with an initial deposit of Rs. 1,000. Thereafter, any amount in multiple of Rs. 100 can be deposited, provided that a minimum of Rs. 1,000 is deposited in a financial year. However, the total money deposited in a single account on a single occasion or multiple occasions, can’t exceed Rs. 1.50 lakh in a financial year.
The rate of interest on SSY deposits in the 2014-15 financial year was 9.1%. At that time, it was the highest interest offered by the government on any small savings scheme. It was later raised to 9.2%. But on 18 March 2016, the government revised the rate of interest from the first quarter of the 2016-17 financial year to 8.6%.
SSY interest is compounded annually from the date of opening and is credited to the account till the deposits mature or the beneficiary withdraws the money. If the account holder opts for monthly interest, the same is calculated on the balance in the account in completed thousands. The remaining fraction continues earning interest at prevailing rates.
Deposits to the account may be made till the completion of 14 years from the account opening date. The account will mature after 21 years from the date on which it was opened, or the marriage of the girl, whichever is earlier. The girl can’t continue the account after her marriage.
Contributions of up to Rs. 1.5 lakh qualify for tax deduction under section 80C of Income Tax Act (1961). The entire maturity amount along with interest earned is non-taxable. Regarding tax treatment, SSY is on the lines of a Public Provident Fund (PPF) account, which qualifies for similar benefits under section 80C.
Frequently asked questions (FAQs)
Here are some FAQs regarding Sukanya Samriddhi:
Is there any penalty on deposits?
An SSY account will be treated as irregular if the minimum deposit (Rs. 1,000) is not made. An irregular account may be renewed/regularised by paying Rs. 50 each year as a penalty, along with the minimum subscription for the number of defaulting years.
What’s the deposit mode?
Deposits to SSY account can be made through cash, cheque, or demand draft (DD) as well as the online payment mode where the bank or the PO has the Core Banking facility. In case of the Cheque & DD payment, the date of encashment will be treated as the date of crediting of the account. The cheque or DD should be drawn in favour of the bank manager or the postmaster of the concerned post office. The depositor must write the account number and beneficiary name on the back of the cheque.
Is rate of interest fixed or variable?
The interest on SSY accounts is likely to vary according to government decisions from time to time. The rate is likely to be revised quarterly like on all other small savings instruments.
What about transferability?
The account can be transferred to anywhere in India, if the girl shifts to that place. She has to submit a fresh residence address proof in this regard.
Is premature withdrawal allowed?
The beneficiary can withdraw 50% of the accumulated amount from the account after she attains the age of 18. The withdrawal can be in a lumpsum or instalments not exceeding one per year,
Can the beneficiary operate the account?
After the girl child attains 10 years of age, she may operate the account herself. However, deposits to the account should be made by the parents/legal guardian.
What about premature closure?
In the event of the account holder’s death, the account will be closed immediately on producing the death certificate. The credit balance in the account, along with the applicable interest of the month preceding the month of death, will be paid to the parents/legal guardian of the beneficiary.
Can an account be opened/operated online?
An SSY account can be opened only by physically visiting the post office or bank. There’s no scope of online account opening. Online transfer of funds is also not allowed. This could be a tad disadvantageous for urban customers but serves the target group of the rural population that has no internet connection.
Sukanya Samriddhi is almost similar to PPF, in terms of taxation. However, SSY has a higher tenure. Considering the intention of the government, SSY is a well-intended financial product. There’s a more social angle to it than investment. Regarding an investment instrument, you can’t invest in it unless you have a daughter. Therefore, SSY can be a part of debt component of your portfolio, which can fund your daughter’s education & marriage goal, but do keep in mind the tenure which is actually 21 years.
The key aim of Sukanya Samriddhi is to change the mindset that daughters are a financial burden. Such a belief is still prevalent in large parts of our country. With the scheme, the government wants to spread the message that a girl child’s future can be secured with a little financial planning.