Sukanya Samriddhi – What You Need To Know?

In a recently conducted survey by an insurance company on urban Indians across 25 cities, revealed that top priority goal for maximum investors (62%) is to accumulate enough fund for their children’s education and marriage. Not surprising. The tendency of choosing investment product for the same varies. Though almost any investment product can be linked to the goal of your choice, often investors prefer to invest in a product which is labelled accordingly. Today let us discuss the features, pros and cons of one such ‘labelled’ product – Sukanya Samriddhi Yojana (SSY).

Features:

The scheme currently provides an interest rate of 8.2% (For Jan -Mar 2024 quarter). This rate gets revised every quarter.

The account can be opened at any India Post office or branch of PSU banks and few private sector banks (ICICI, HDFC, Axis).

The account can be opened anytime between the birth of a girl child and the time she attains 10 years of age. Only one account is allowed per child. Parents can open a maximum of two accounts for each of their children (exception allowed for twins and triplets).

A minimum of Rs. 250 must be deposited in the account initially. Thereafter, any amount in multiples of Rs 100 can be deposited. However, the maximum deposit limit is Rs. 150,000 in a financial year.

The account reaches maturity after 21 years from the account opening date (or at any time after the girl gets married after the age of 18 years). Deposits in the account can be made for 15 years from the date of the opening of the account. So, in the last 6 years, the account will only earn only the applicable rate of interest, no fresh deposits will be made then.

Sukanya Samriddhi Yojana is an EEE (Exempt – Exempt – Exempt) product from the taxation point, like PPF.

Partial withdrawal of up to 50% of account balance can be opted for the purpose of higher education only after account holder’s age of 18 years. Pros:

Tax benefits are surely a plus here. The forced discipline is another plus point for many casual investors.

Cons:

The biggest con of this product can be the fact that it cannot be used for boys. Also, the product seems more aligned to a girl child’s marriage than to her higher education. Liquidity is a major concern here, as a parent may require funding any time after the girl child attains the age of 15-16 years. Considering the low interest rate and limit on maximum investment that can be made in a year – the product alone can almost never be sufficient to achieve both the goals of higher education and marriage considering the current cost and high inflation. Conclusion:

As you are investing here for the long term, starting here with higher equity exposure through mutual fund is definitely a good idea. Later, when the goal year comes nearby, safer debt exposure can be increased in your portfolio. Higher liquidity, no maximum limit on making investment, flexible topping up with additional investment – all these are definitely a plus here, provided you are disciplined and focused.