Sukanya Samriddhi Yojana Account Review

The launch of Sukanya Samriddhi Yoajna account was part of the ‘Beti Bachao Beti Pada’ campaign launched by the government. It is a Small Savings Special deposit Scheme for the girl child. Its not just other scheme to provide social benefits but a goodlong term debt investment. It is designed in a way to support her higher education and/or marriage.

Key features of Sukanya Samriddhi Yojana Account

Definition	·         The Sukanya Samriddhi account is a savings account that can be opened in the name of a girl child from the time she is born till she becomes 10 years old. It can be opened in a post office or public sector bank like SBI, Bank of Baroda, Canara Bank etc.
Deposit Rules	·         Sukanya samridhi yojna account can be opened with a minimum amount of Rs. 1000 and a maximum of Rs. 1,50,000 in a financial year. One can deposit money for 14 years from date of account opening.Deposits in multiples of hundred can be made in form of cash, cheque or demand draft by guardians or parents.
Interest Rate	·         For the financial year, 2014-15, the interest rate is set at 9.1% p.a. (TAX FREE) It will be decided every year. Interest will be compounded annually.
Other Benefits and Features	·         50% of the fund can be withdrawn prematurely if the need arises after the girl turns 18. If the girl shifts to a different place in India, the account can be transferred ·         The account will mature after 21 years from the date of opening the account. The account can be continued till the girl’s marriage if some formalities are completed. ·         Under section 80C, one can get a tax benefit on deposit in this account up to a sum of Rs. 1,50,000. ·         When the girl becomes 10 years old, she can operate the account on her own. But deposits can be made only by the guardian or parents. ·         Premature closure of Sukanya Samridhi yojna account is possible in case of the girl’s death. The amount with interest will be paid to the guardian/parent of the child.

Drawbacks of Sukanya Samriddhi Scheme

• A penalty of Rs. 50 per year is charged if one fails to deposit in a year.
• One family can open only 2 accounts even if there are more than 2 girls in the family unless there are more than 2 births at 1 time in which case, accounts for all the girl children born at the same time can be opened.
• There is no facility online to operate the account.
• The interest rate will be determined every year in sukanya samridhi account. Currently it is taxfree 9.1%. (PPF pays 8.7%)
• There is a limit that amount can be deposited only for 14 years which means one can save money in the account only for 14 years. It is not clear as to why this limit is present. As a norm, no parent will think of investing for their children only for 14 years for marriage and education.
• Interest rates can fluctuate.

* Please check complete details before opening the account.

 Sukanya Samridhi Yojana – from planning perspective

1. First look at your asset allocation & then decide the amount that you would like to contribute
2. If you know your long term goals – this scheme is much better than your FDs, RDs & other post office schemes
3. If you are the one who invest in insurance child future plans – discontinue all that (get in touch with your agent/advisor) & add that amount here
4. Start small & depending on cashflow & goals increase amount in future
5. Interest rates may come down in future but you should not be worried about that – government will atleast try to match inflation numbers on yearly basis
6. When it comes to tax – Sukanya Samridhi account is Exempt, Exempt & Exempt (similar to PPF) but keeping tenure & short term goals in mind will help
7. Right now interest in Sukanya Samriddhi Yojana is higher than PPF (current rate is 8.71 – changes every year) but that doesn’t mean you divert PPF amount here
8. Only one account per Girl Child is allowed (max 2 girl child in family)
9. Illiquidity is both a plus & minus in Sukanya Samridhi – depends how you have planned your finances
10. If we assume average rate of interest that you will get in this account is 8% – then investment of Rs 1.5 Lakh per year for 14 years (total investment 21 Lakh) can turn Rs 67 Lakh in 21 Years (assuming no withdrawal before that)

• Documentation required to open Sukanya Samriddhi Account

1. Birth certificate of the girl
2. Address proof
3. Photo identity proof of the girl
4. Photo identity proof of the parent/legal guardian

Should I invest in Sukanya Samriddhi Yojana?

Considering the woeful state of the girl child, the Sukanya Samriddhi Account is a good start to give her financial independence. It will not give returns like the equity market or mutual funds, but it is a less risky investment avenue. The current interest rate is also good. It may or may not be enough to save only in this scheme for marriage and education considering inflation but can be a part of one’s portfolio. It can be part of the debt investments. I haven’t opened the account yet but may be doing it in near future. (will prefer dealing with nearest banks rather than post office)