Sukanya Samriddhi Yojana (SSY): All you Need to Know

In this article, we will discuss

Sukanya Samriddhi Yojana (SSY): All you Need to Know

In India, the birth of a girl child is often seen as a financial burden on a family. In a bid to reform this thought process, the Government of India brought in the ‘Beti Bachao, Beti Padhao’ campaign in 2015. The campaign contained various initiatives aimed at improving and empowering the lives of girl children in the country.

One of the many major initiatives of the Beti Bachao, Beti Padhao campaign was the Sukanya Samriddhi Yojana (SSY). This initiative is designed to promote the welfare of girl children by providing a long-term savings option with attractive interest rates and tax benefits.

In this comprehensive guide, we are going to explore all the major aspects of the SSY initiative, from its features and benefits to the account opening process and withdrawal rules. Additionally, we will also look into how you can use a Sukanya Samriddhi Yojana calculator as a financial planning tool.

What is the Sukanya Samriddhi Yojana (SSY)?

Launched by the Government of India, the Sukanya Samriddhi Yojana (SSY) is a small savings scheme designed to encourage parents of girl children to build a fund for their daughters’ education and marriage expenses.

Since the scheme is backed by the government, it carries little to no risk of default and has one of the highest rates of interest among fixed-income instruments in the country. The scheme’s primary objective is to provide financial security to girl children.

A Sukanya Samriddhi Yojana account may be opened at any post office branch within India or a participating bank branch. Once the account is opened, the parent or guardian of the girl child can start depositing funds, subject to the minimum and maximum deposit limits per financial year.

Eligibility Criteria for the Sukanya Samridhhi Yojana

The Sukanya Samriddhi Yojana is specifically aimed at promoting the welfare of girl children. Here is a quick overview of the eligibility criteria for this scheme:

  • The parent or legal guardian of a girl child can open an SSY account with a bank or the post office.
  • The girl child must be below the age of 10 at the time of opening the account.
  • Only a single SSY account can be opened per girl child, with a maximum of up to two accounts per household (for two girl children).

What are the Key Features and Benefits of the Sukanya Samriddhi Yojana?

Before we proceed to look into the Sukanya Samriddhi Yojana interest calculator, let us first explore the several key benefits and features that set this investment option apart from the others.

  • Flexible Deposit Options

A major feature of the SSY initiative is the flexible deposit limit. Parents and legal guardians can deposit anywhere from Rs. 250 to Rs. 1.5 lakh per financial year in a Sukanya Samriddhi Yojana account. The deposit can be made in multiples of Rs. 100, which provides flexibility and enables parents and guardians of girl children from all walks of life to contribute to their better future. Additionally, deposits can be made in the form of cash, cheques, demand drafts, and even electronic fund transfers.

  • High Interest Rate

Sukanya Samriddhi Yojana offers some of the highest returns among government-backed savings schemes. The interest rates are reviewed and announced every quarter. For the period starting from January 1, 2024, to September 30, 2024, the interest rate on SSY accounts has been set at 8.2% per annum. Such high interest rates ensure that the invested amount grows substantially over time.

  • Long-Term Investment Option

The Sukanya Samriddhi Yojana account has a maximum tenure of 21 years, assuming that the account is opened as soon as the girl child is born. The long-term nature of this investment option enables significant wealth accumulation over time due to the power of compounding.

  • Sovereign Guarantee

Since SSY is a government-backed savings scheme, it offers complete security for the amount invested. This makes it a safe and reliable investment option for parents concerned about their daughter's future.

  • Account Transfer Facility

The Sukanya Samriddhi Yojana account can be transferred anywhere in India. This ensures the continuity of the account regardless of the location of the girl child and her parents or guardians. Additionally, the account can also be transferred from one bank to another or from the post office to a bank.

  • Tax Benefits

The Sukanya Samriddhi Yojana is among the few investment options that feature in the ‘Exempt-Exempt-Exempt (EEE)’ category. This essentially means that the amount that is invested in the account, the interest earned on the invested amount, and the final maturity amount are all tax-free. This makes it an attractive savings option from a tax-saving perspective.

How is the Interest on Sukanya Samriddhi Yojana Accounts Calculated?

Although an SSY interest rate calculator can help quickly determine the amount of interest the deposits are likely to generate, it is advisable to know how the interest is calculated.

The interest on a Sukanya Samriddhi Yojana account is computed on the lowest balance during the period between the 5th day of a month and the last day of that respective month. Furthermore, the interest on the account is compounded annually. Therefore, to maximise the returns from the account, it is advisable to deposit funds before the 5th of every month.

The mathematical formula that is used to calculate the maturity amount of an SSY account is as follows:

Maturity Amount = A [1 + (R ÷ N)NT

Here, A represents the amount of deposit, R represents the rate of interest, N represents the frequency of compounding, and T represents the tenure in years.

Now, although it is possible to calculate the maturity amount and the total interest accrued on the account manually, it is advisable to use a Sukanya Samriddhi scheme calculator. This will not only help save time and effort but also ensure that there are no errors or mistakes in the calculations.

How to Open a Sukanya Samriddhi Yojana Account?

A Sukanya Samriddhi Yojana account may be opened with a bank or the post office. Here is a quick overview of the step-by-step process you need to follow to open an account.

  • Step 1: Visit a post office branch or the branch of a participating bank.
  • Step 2: Fill out Form - 1 and submit it with all of the relevant supporting documents.
  • Step 3: Make the first deposit in demand draft, cheque, or cash using the pay-in slip (Form - 2). The deposit must not be lower than Rs. 250 or higher than Rs. 1.5 lakh in a financial year.
  • Step 4: Once the payment is made, the bank or the post office will provide an acknowledgement of the payment as well as the application form.

You can use the acknowledgement number to track the status of the application. Once the application verification process is complete, the account will be opened, and a passbook for the account will be provided.

Some participating banks enable you to open a Sukanya Samriddhi account online through their internet banking portal as well. In such cases, you will have to fill out and submit an online application form along with scanned copies of the necessary documents and make the first deposit online.

Documents Required for Opening a Sukanya Samriddhi Yojana Account

The list of documents that need to be submitted for opening a Sukanya Samriddhi Yojana account is as follows:

  • Sukanya Samriddhi Yojana account opening form (Form 1)
  • The birth certificate of the girl child (with their name) for whom the account is being opened
  • A valid identity proof of the parent or legal guardian of the girl child
  • A valid address proof of the parent or legal guardian of the girl child
  • A recent passport-size photograph of the girl child as well as her parent or legal guardian

Note: The documents mentioned above are merely meant to be illustrative. The bank or the post office may request that more supporting documents be submitted along with the application form.

Sukanya Samriddhi Yojana Account: Withdrawal and Closure Rules

Although the SSY account is designed to be a long-term savings instrument, there are provisions for premature withdrawal and closure under certain circumstances. Let us explore each of them in more detail.

  • Premature Withdrawal

Once the girl child is 18 years of age or has completed her 10th standard education, the funds in the SSY account can be prematurely withdrawn. Up to a maximum of 50% of the amount in the account at the end of the immediately preceding financial year can be withdrawn, but only for the child’s education.

The premature withdrawal must be made in Form 3, along with documentary evidence proving that the funds are being withdrawn for higher education. The document can either be a confirmed admission letter or a fee slip from an educational institution.

The premature withdrawal from the SSY account can be made as a lump sum or in installments. In the case of installments, only one withdrawal per year is permitted for a maximum period of five years.

  • Premature Closure

Premature closure of the Sukanya Samriddhi Yojana is only permitted after the completion of five years from the date of account opening.

The account can only be closed prematurely in the event of the unfortunate death of the girl child or on compassionate grounds, such as medical support for life-threatening diseases. In the case of death, the parent or guardian can file Form 2 along with the death certificate of the girl to close the account and claim the funds. In the case of life-threatening diseases, documentary evidence is required to prematurely close the account.

  • Normal Closure

The Sukanya Samriddhi Yojana account automatically matures once the girl child reaches 21 years of age, at which point she can file Form 4, close the account, and claim the funds along with the accumulated interest.

The SSY account can also be closed normally, even before the girl child reaches 21 years of age. However, this is only possible if the girl child is slated to get married after turning 18 years of age. In this case, Form 4 must be submitted along with a declaration (notarised on non-judicial stamp paper) confirming that the girl is not under 18 years of age.

Furthermore, the request for account closure on the grounds of marriage shall not be allowed before one month from the date of the marriage. Also, the closure request will not be entertained if it is made three months after the date of marriage.

Conclusion

From ensuring financial security and promoting the welfare of a girl child to encouraging her education, the Sukanya Samriddhi Yojana is a scheme that addresses multiple objectives. With advantages like high interest rates, tax benefits, and a sovereign guarantee, the scheme serves as an excellent long-term savings option for parents of girl children.

Now, before you proceed to invest in the scheme, it is advisable to use an online SSY calculator. The tool is designed to provide an estimate of the accumulated interest and the final maturity amount that you are likely to earn from your investment in the scheme. That’s not all. The benefits of a Sukanya Samriddhi Yojana calculator extend far beyond merely helping you determine the returns you are likely to receive. In fact, it can also help you save time and effort and plan your investment in the scheme more effectively.

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847

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