Benefits Of Sukanya Samriddhi Yojana For Girl Child

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How the Sukanya Samriddhi Yojana benefits the girl child in India

Sukanya Samriddhi Yojana is a government-backed savings scheme developed for girl children in India. This scheme was launched in January 2015 as a part of the government’s ‘Beti Bachao - Beti Padhao’ initiative. This scheme is intended to provide financial security for girl children belonging to underprivileged families in the country. One of the highlights of this scheme is that it comes with a specific lock-in period to ensure that the accrued money benefits the girl child during the time of marriage or higher education.

Eligibility for Sukanya Samriddhi Yojana

The eligibility criteria outlined by the government for enrolling in this scheme are given as follows:

• This scheme is available only for girl children living in India.
• The girl child must be less than 10 years of age at the time of signing up for this account.
• A maximum of two girl children from a family can be enrolled in this scheme. A third account can be opened if the family has twin girls.
• It is mandatory to submit the age proof of the children while opening the account.

Benefits of Sukanya Samriddhi Yojana

This savings scheme comes with a range of benefits specifically aimed at supporting the future needs of girl children in our country. Some of the top benefits of this scheme can be listed as follows:

• High interest rate: When the scheme was originally launched in 2015, it offered an interest rate of 9.1%. For the fiscal year 2018-19, the scheme offers an interest rate of 8.1%, which is still higher than most of the small savings accounts in India. The interest rate is prone to changes as deemed by the Government of India. Considering the fact that most savings banks in the country offer only about 3.5% to 4% interest for savings accounts, the high interest rate offered here will be beneficial for girl children.
• Lock-in period: The maximum tenure of this scheme is 21 years. If an account is opened at the birth of a girl child, it will mature when the child reaches 21 years of age. If the account is opened at 10 years of age, it will remain active till the child reaches 31 years of age or till her marriage (whichever comes first). Premature withdrawal is also allowed for higher education once the girl child reaches 18 years of age. Till the date of maturity, it is not possible to take out any money from this account. This lock-in period ensures that the purpose of the account is rightly met without any possibility of draining out money midway through the tenure.
• Low deposit amount: As an initiative focused mainly on underprivileged people in India, this savings scheme can be opened with a minimum deposit amount of Rs.250 (lowered from the previous requirement of Rs.1,000). Once the account is opened, we can add additional deposits in multiples of Rs.100. The maximum deposit amount under this scheme is capped at Rs.1.5 lakh per year. This flexible deposit option ensures that people can save money under this scheme without burdening their family’s finances.
• Payment in the name of the girl child: Once the account is opened in the name of a girl child, any withdrawals after maturity can be done only in the name of the accoutholder. This aspect of this account is mainly to empower girl children and provide them with the much needed financial independence. Also, girl children can operate their own account once they reach 10 years of age. Once the girl child reaches 18 years of age, the account shall be mandatorily operated by the girl child.
• Interest after maturity: If an account is not closed even after maturity, it will continue to accrue interests till the time of its closure. This is a unique feature that is not available in many other financial schemes. People can withdraw money only during the time of need and continue to earn interest till then.
• Flexible terms: Another major feature of the Sukanya Samriddhi Yojana is the flexible terms associated with it. People can choose any mode of payment (cash, cheque, or demand draft) for making deposits into this account. If the account turns inactive due to non-payment of the minimum deposit amount, it can be easily revived by paying an additional Rs.50 as penalty. Also, if the account is proven to be causing undue hardship to a person, it can be closed without losing out any deposited amount.
• Tax benefits: The money deposited in this account is eligible for income tax relief as per Section 80C of the Income Tax Act. Any interest income generated from this account is also eligible for tax relief. Once the account matures, the total amount generated from this account can be easily withdrawn without paying any income tax.

Things to note before investing in Sukanya Samriddhi Yojana

The benefits listed here make this scheme one of the best investment tools available in the market when you have to provide for a girl child in your family. However, there are certain things to be considered before you think about investing in this scheme. It is worth investing in this scheme if the following factors are considered:

• The tenure of 21 years is a long period of time. It is not possible to make any withdrawals from this scheme during this lock-in period even during emergency situations.
• The interest rate keeps fluctuating every year according to the discretion of the government. In that case, it is impossible to predict the course of next year’s interest rate. The scheme started with an interest rate of 9.1% per year. It currently offers 8.1% on deposits. This must be factored in before making the deposits.
• In case of the death of the girl child within the scheme tenure, the account shall be closed by the parent or legal guardian. Death certificate of the child must be produced in order to withdraw the deposited money.
• If there is any change in the citizenship of the girl child, it must be communicated within one month of the change in status. In this case, the account shall be closed and the outstanding amount shall be paid to the account holder.

Conclusion

The Sukanya Samriddhi Yojana is a unique scheme that offers great benefits for account holders. Though the lock-in period of this scheme is quite high, the flexible benefits offered by the scheme make it a great initiative for girl children in the country. The purpose of this account is to provide for girl children during their time of marriage or higher education. With careful planning, parents can build a decent corpus for the future financial requirements of their children.